There are 3 sizes of companies to consider when preparing your accounts; small, medium or large. There are thresholds for turnover, balance sheet total (meaning the total of the fixed and current assets) and the average number of employees, which determine whether your company is small or medium-sized. Any companies that do not meet the criteria for small or medium are large companies and will have to prepare and submit full accounts.
A small company can prepare and submit accounts according to special provisions in the Companies Act 2006 and the relevant regulations. This means that they can choose to disclose less information than medium-sized and large companies.
The Thresholds are:
| Test | Small Company | Small Group | Medium Company | Audit Exempt |
| Sales must be below | £6.5 million | £6.5m net or £7.8m gross | £25.9 million | £6.5 million |
| Balance Sheet Total | £3.26 million | £3.26m net or £3.9m gross | £12.9 million | £3.26 million |
| Average no. of employees | 50 | 50 | 250 | 50 |
A small company must meet at least two of the conditions above.
Generally, small company accounts prepared for members include:
- a profit and loss account
- a full balance sheet, signed by a director on behalf of the board and the printed name of that director
- notes to the accounts
- group accounts (if a small parent company chooses to prepare them)
And they should be accompanied by:
- a directors’ report that shows the signature of a secretary or director and their printed name
- an auditors report that includes the printed name of the registered auditor (unless the company qualifies for exemption from audit and takes advantage of that exemption)
For financial years ending on or after 1 October 2012 a small company only needs to qualify as small to be exempt from Audit.
Even if a small company meets these criteria, it must still have its accounts audited if a member or members holding at least 10% of the nominal value of issued share capital or holding 10% of any class of shares demands it; or – in the case of a company limited by guarantee – 10% of its members in number.
A medium company must meet at least two of the conditions above for medium companies.
Medium-sized accounts must include:
- a profit and loss account
- a balance sheet, showing the printed name and signature of a director
- notes to the accounts
- group accounts (if appropriate)
And should be accompanied by:
- a directors’ report including a business review showing the printed name of the approving secretary or director
- an auditor’s report that includes the name of the registered auditor unless the company is exempt from audit
Medium-sized companies may omit certain information from the business review in their directors’ report (that is, analysis using key performance indicators so far as they relate to non-financial information). Also a medium-sized company which is part of an ineligible group can still take advantage of the exemption from disclosing non-financial key performance indicators in the business review.
Medium-sized companies preparing Companies Act accounts may omit disclosure with respect to compliance with accounting standards and related party transactions from the accounts they send to their members.
Abbreviated accounts of a medium-sized company must include:
- the abbreviated profit and loss account (this must be full if preparing IAS accounts)
- the full balance sheet showing the printed name and signature of a director
- a special auditor’s report showing the printed name of the registered auditor
- the directors’ report showing the printed name of the approving secretary or director
- notes to the accounts
What is a dormant company?
A company is dormant if it has had no ‘significant accounting transactions’ during the accounting period. A significant accounting transaction is one which the company should enter in its accounting records.
When determining whether a company is dormant you can disregard the following transactions:
- payment for shares taken by subscribers to the memorandum of association
- fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns
- payment of a civil penalty for late filing of accounts
How long do I normally have to file my accounts?
The time normally allowed for delivering accounts to Companies House is:
- 9 months from the accounting reference date for a private company
- 6 months from the accounting reference date for a public company
You can submit the following accounts online:
- dormant company accounts
- small full audit exempt accounts
- small audit exempt abbreviated accounts
Failure to deliver accounts on time is a criminal offence.
Further information available from Companies House
steve@bicknells.net
