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Understanding your Limited Company Accounts

Every Company registered at Companies House has to file Statutory Accounts on an annual basis. Similar documents have to be sent to HMRC, along with the Company’s Corporation tax return.

Every Company registered at Companies House has to file Statutory Accounts on an annual basis. Similar documents have to be sent to HMRC, along with the Company’s Corporation tax return.
Annual accounts are a summary of the company’s financial transactions in a given accounting period (usually 12 months). These accounts are prepared from the books and records of the company (invoices, expenses, bank statements, payroll etc). All of which Orange Genie Accountancy can assist you with if you choose us as your contractor accountants. 

Annual Accounts can be prepared in two formats. Abbreviated Annual Accounts are due for filing with Companies House within 9 months of the year end. These Abbreviated Accounts include only a balance sheet and no detailed information on trading activity.

HMRC require a full set of Annual Accounts, including a Profit and Loss Account within 12 months of the year end. This has to be accompanied by the Company's Tax Return, CT600.

What’s included in the accounts?

A full set of accounts includes:

  • Directors report - this standard report details the period that the accounts are being prepared for and that they have been prepared in line with the relevant acts of law. The report also provides details on the principle activity of the company and the directors who were in office during the period.

  • Accountants report – this report states that the Directors requested for the accounts to be completed by the accountant and that they have been prepared on the basis of the information provided by you the director.

  • Profit & Loss Account – this report provides the detail figures on how the company has traded. This will show the resulting profit or loss and how it has been generated.

  • Turnover will be recorded and will cover the whole period. It will include all invoices for work done in the period and will be shown net of VAT. There will be a separate line to indicate any Flat rate VAT savings that have been made in the period.

  • Administration Expenses will list the major costs of the company throughout the period. These will be taken from both what has been spent through the company bank account and incurred as expenses.

  • Salaries will also be included in these costs. Any bank charges incurred will be shown separately.

  • Tax – The Corporation tax charge will be shown in the accounts. This is tax payable on the profits at 20%

  • Balance Sheet – this is a snapshot of the company’s assets and liabilities as at the balance sheet date. Included in the balance sheet will be:

  • Fixed Assets - any assets purchased and still held by the company for ongoing use eg a computer. The assets are shown at their book value.

  • Current Assets - this will usually include amounts owed to the Company eg outstanding invoices and the bank balance.

  • Creditors - amounts falling due within one year, an additional note will break down this figure but normally it consists of Corporation tax liability, any VAT or PAYE unpaid at the year end and any monies owed to the Director.

  • Called Up Share Capital - this is the value of the shares owned in the Company

  • Profit & Loss Reserve – this is the retained profit or loss for the year and previous periods.

  • Notes to the Accounts – various figures from the Profit and Loss account and Balance sheet are further explained in Notes to the Accounts. These notes will include disclosure of transactions with Directors. Any monies owed to a Director or from a Director by way of a loan at the year end will need to be disclosed.

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