Business owners have different options available to file their company’s account: full, micro-entity, dormant and abridged accounts. For startups and small companies with a low turnover, filing an abridged account is the best choice. These accounts contain fewer details but fulfil the compliance requirement of Companies House and HMRC. When filing an abridged account, you can omit some financial details from the balance sheet and profit and loss statement of the company. Let’s delve deep into what are abridged accounts? What information to include in abridged accounts? When does your company need to file abridged accounts? And what accounts do you need to send as a micro-entity?
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What are Abridged Accounts?
All businesses in the UK need to submit annual accounts at the year-end. Abridged accounts are shorter than full accounts but contain more details than abbreviated accounts (abolished in 2016).
Abridged accounts are the simple and short version of your company’s statutory accounts. They need limited and short information compared to full accounts. So, they can be the best option for those small businesses that don’t want to disclose their financial information to the public.
What Information to Include in Abridged Accounts?
Here the net profit is kept secret from the general public. Instead of the total turnover or cost of sales of your business, here your profit and loss statement will start from the gross profit. In addition, this account doesn’t require the breakdown of balance sheet items (including fixed assets, creditors and debtors), but it’ll indicate their movement. It means that you don’t need to show your corporation tax publically.
These accounts include limited information compared to full accounts. Generally, abridged accounts:
- contain a simpler balance sheet with the name and director’s signature and related notes
- may include a simple profit and loss account and director’s report
If you make the decision to fillet your accounts (abridged), you don’t need to include the profit and loss report and the director’s report on the version of your accounts that you need to send to Companies House.
When Does your Company need to File Abridged Accounts?
If you’re a small company, you are allowed to file abridged accounts if you meet two of the below-mentioned conditions:
- The total turnover of your company is below £10.2 million
- Your balance sheet is below £5.1 million
- The number of your employees is below 50
Importantly, you can only send the abridged versions of accounts if all company’s shareholders agree. And you need to mention the consent of shareholders on your balance sheet while filing your accounts with Companies House that all of them have agreed to send abridged accounts.
What Accounts Does Micro-entity Need to Send?
Micro entities need to prepare a balance sheet and profit and loss statement with less information than that of abridged account. In addition, the accounts of these entities don’t need you to prepare directors’ reports. Remember that you only need to submit micro-entity accounts if you fulfil two of the below conditions:
- The total turnover of your company is below £632,000
- Your balance sheet is below £316,000
- The number of your employees is below 10
Hire an Accountant to Prepare and File your Accounts
So, after giving this post a read, we hope that you have understood what are abridged accounts? What information to include in abridged accounts? When does your company need to file these accounts and what accounts do micro-entities need to send?
Although it is not necessary to hire an accountant to prepare and file your accounts, but it is well worth it. Collecting information for filing accounts can be a time-consuming and hectic task, as the owner of a limited company, you might don’t have enough time for that. An accountant will not only save your time, money and stress but will make sure that you’re meeting all the statutory obligations of HMRC and Companies House. And fortunately, the cost spent on an accountant is purely a business expense that means you don’t need to pay tax on it.
So why not contact our limited company accountants to file your abridged accountants at an affordable rate!
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Disclaimer: This blog provides basic information on abridged accounts.