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Accounts & Finance

When you form a new limited company or LLP, you will be expected to keep a close eye on your company’s finances. Your company will have annual, monthly and even weekly accounting requirements you must fulfil, and several key filing deadlines you cannot afford to miss.

The following guide provides a comprehensive outline of each accounting requirement you must fulfil and how to ensure your company meets all requirements.

Annual Return

No matter what type of company you form to run your business, you will be expected to file a completed annual return with Companies House at least once per year. An annual return is an official document that keeps the UK Government in the loop on key details of your company. Your first annual return will be due no later than 28 days after the anniversary of your company’s incorporation.

As a company director or designated LLP member, it is your responsibility to ensure your company’s annual return is filed correctly and submitted to Companies House by its statutory deadline.

Details you must include are:

  • Name of your company or LLP
  • Company registration number (CRN)
  • Registered office address
  • Single alternative inspection location (if applicable)
  • Type of company
  • ‘Made-up’ date of the annual return.
  • Standard Industrial Classification (SIC) code.
  • Directors and company secretary details (if applicable)
  • Details of LLP members (if applicable)
  • Details of shareholders or guarantors
  • Statement of capital (if applicable)

When you are ready to file your annual return, the simplest way is to do this online through the Companies House WebFiling service. It will cost you £13 to file a return online. Alternatively, you can file your company’s annual return by post for a cost of £40.

Annual Accounts

Every year, your company is legally required to prepare and file annual accounts for HMRC, Companies House and company shareholders. Annual accounts provide officials and stakeholders with a detailed report on your company’s financial year. You will also need the information compiled for your annual accounts to prepare your company tax return for HMRC.

Annual accounts cover your company’s 12-month financial period, and they must be submitted to Companies House within nine months of your Accounting Reference Date.

To complete your annual accounts, you must include:

  • A company balance sheet (signed by director)
  • A profit and loss account
  • Notes about the accounts
  • A director’s report
  • An auditor’s report (if applicable)

Please note that some companies may be exempt from filing a full annual return. Small companies and micro-entities are only required to file a balance sheet with notes with Companies House – although they must still file a full annual return as part of their company tax return with HMRC.

For all intents and purposes, a small company must meet two of the following criteria:

  • It has less than 50 employees
  • Its balance sheet covers less than £3.26m
  • Its annual turnover is less than £6.5m

Likewise, a micro-entity must satisfy two of the following criteria:

  • It employs 10 people or less
  • Its balance sheet covers less than £316,000
  • Its annual turnover is less than £632,000

Tax Returns

Every year, your company must file a Company Tax return through HMRC – even if it does not make any taxable profit during that tax period.

As company director, you are responsible for ensuring that your annual Company Tax return is filed on time.

To complete each form, you must include:

  • Capital allowances you want to claim for business assets you’ve bought
  • Gains on assets that you’ve sold for more than you paid for them
  • Directors’ loans not repaid at the end of the company’s financial year
  • Repaid directors’ loans you want to reclaim tax for
  • Reliefs you want to claim
  • Any losses that you ‘carry forward’ from your previous accounting period

You should use HMRC’s online Corporation Tax service to send your Company Tax Return. Using this service, you can:

  • Create or upload your company’s statutory accounts
  • Create or upload Corporation Tax calculations and any supporting documents
  • Download and fill in form CT600

For more information on Company Tax returns, read our guide on Registering with HMRC.

VAT Returns

If your company is registered for VAT, you will be expected to submit VAT returns to HMRC every three months. This is what’s known as a VAT accounting period, and VAT Returns must be submitted for each period even if there is no VAT to reclaim or pay.

To complete your VAT Return, you will need the following information:

  • Total sales and purchases
  • Amount of VAT owed
  • Amount of VAT you would like to reclaim (if applicable)
  • VAT refund due (if applicable)

These returns should be submitted online, and you will need to have your VAT number to do so.

PAYE

If you plan to hire anyone to work at your new limited company or LLP, you will be legally required to register for HMRC’s PAYE scheme. The UK Government uses this scheme to deduct Income Tax and National Insurance Contributions from your employees’ salaries.

If you run payroll yourself, you will need to report your employees’ payments and deductions to HMRC before each payday. Your payroll software should work out how much tax and National Insurance you owe, and you will then have to pay HMRC every month based on those sums.

If you would like to claim any reduction on what you owe HMRC, you will be required to send a separate report.

Self-Assessment Returns

All company directors or LLP members are required to register for Self-Assessment with HMRC and file an individual tax return at the end of year financial year. All directors will be expected to pay Income Tax on all income accrued from various sources.

To ensure your personal records are complete, you need to make sure that you are keeping all receipts, bank statements, invoices and dividend vouchers. You are legally required to hold on to these items for a minimum of five years after each tax deadline they relate to.

Your National Insurance Contributions will depend entirely on how much you have earned during the financial year. If your income exceeds current thresholds, you may fall under Class 2 NI, which means you could be charged on a weekly basis.

For more information on Self-Assessment tax requirements, please visit our blog.