If you are a small business, you can file micro-entity accounts to save your money and time. However, if you are looking for a significant source to know what is micro-entity accounts, your business qualifies as a micro-entity or not, and where to submit your prepared accounts, then you have just found the right source! So, let’s start!
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What is Micro-Entity Accounts?
Filing micro-entity accounts is not mandatory for them, but if they want to, they can still file full accounts, same as large companies. Therefore, micro-entity accounts is a simpler way to file reduced accounts for small companies.
Do I Qualify as a Micro-Entity?
According to the UK government, a micro-entity is described as a very small company. You will be qualified as a micro-entity if you meet two of the following:
- Turnover of £632,000 or less
- £316,000 or less on your balance sheet
- Ten employees or less
If your company is any of the following, you will not abridge accounts even if you meet the conditions mentioned above.
- PLC (public limited company)
- A financial institution like a bank or lender
- LLP ( limited liability partnership)
- Not-for-profit organisation
You can still file accounts as a small company in case you do not qualify.
How to Prepare Micro-Entity Accounts?
Every year, you must file your company accounts as it is a legal requirement. In addition, you have to submit the following things if you qualify as a micro-entity.
1) A Simplified Balance Sheet
The details of the creditors and debtors will not be needed to include in it. But, you will require footnotes and the approval of a director. You will also have to add a statement confirming that it is being prepared as per micro-entity provisions.
2) Simplified Profit & Loss Account
It is not mandatory. However, it can be abridged, beginning from gross profit rather than turnover if you choose to send it.
3) An Auditor’s Report
Most of the micro-entities do not include this report, but you can if you want to submit it.
4) A Director’s Report
This is also not mandatory in case you submit abridged accounts or micro-entity.
How to Submit Micro-Entity Accounts?
The online filing service of the Companies House is utilised by most of the micro-entities. All you need is the government gateway login and an authentication code from Companies House.
Micro-entities can also use the service of CATO (company accounts & tax online). It will permit you to submit your accounts to Companies House and HM Revenue & Customs at a time.
You can also file these accounts by post, but keep in mind to prepare these accounts earlier. This is because postal submissions take a long time to process.
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Quick Sum Up
We hope now you have understood what is micro-entity accounts and how to prepare and submit them. Every year, it is mandatory to file your company accounts; otherwise, you will face penalties. Therefore, make sure to prepare your accounts properly and submit them before the deadline or ask an expert to do this on your behalf!
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Disclaimer: This article intends to provide general information based on what is micro-entity accounts.