What do you need to know about annual accounts?
Are you a business owner who wants to gain a more in-depth insight into annual accounts? These accounts are often known as business accounts and are important in order to ensure your business runs successfully.
What are annual accounts?
Annual accounts provide a complete record of a business’s financial history for a financial year.
This information is used to prepare tax returns for HMRC and to estimate how much Corporation Tax is payable by a company.
What types of annual accounts are there?
In the UK, there are five types of company accounts:
- Small business accounts
- Micro-entity accounts
- Large corporate accounts
- Medium business accounts
- Inactive business accounts
All companies, whether commercial or non-commercial, are required to prepare accounts and send copies to their shareholders and to Companies House.
Commercial companies must submit account information to HMRC.
What should an annual account consist of?
When you are compiling your business accounts, you will need to ensure that it includes the following information:
- a ‘balance sheet’, which shows the value of everything the company owns, owes and is owed on the last day of the financial year
- a ‘profit and loss account’, which shows the company’s sales, running costs and the profit or loss it has made over the financial year
- notes about the accounts
- a director’s report (unless you’re a ‘micro-entity’)
If you need advice on annual accounts or related matters, contact us today.