Micro Entity Accounts – who can file them? 1

Micro Entity

Micro-entity accounts are a new type of accounts that can be submitted to Companies House from 1 December 2013. They will provide the smallest companies with the opportunity to prepare and publish simplified financial statements (profit & loss account; and balance sheet) if they wish.

A micro-entity is defined as meeting two of the following criteria:

  • Balance sheet total: £316,000
  • Net turnover: £632,000
  • Average number of employees during the financial year: 10 (or fewer)

Micro Entities are exempt from filing their profit and loss with Companies House.

Business Minister Jo Swinson said:

“Thriving micro-businesses are a vital ingredient for a stronger economy. However, because of their size they don’t always have dedicated finance teams behind them. We therefore need to make sure that they can focus on growing their business – rather than completing unnecessarily detailed paperwork.”

There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.

I don’t think this is going to help much? Micro Businesses still need to file corporation tax returns, deal with PAYE, RTI, VAT, minimum wage, Auto Enrolment Pensions, and a wide range of other requirements

steve@bicknells.net

Can I prepare Abbreviated Accounts? 2

Young woman with checklist over shoulder shot

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

How to Issue and Transfer Shares in an SME 4

When you first form a limited company, the formation agent will arrange the issue of the Subscriber Shares.

Following that you can allocate new shares using Form 88(2)

http://www.companieshouse.gov.uk/forms/generalForms/882Revised2005.pdf

Before the Companies Act 2006 companies had authorised share capital so before issuing shares:

  1. Check the Memorandum and Articles
  2. Check any Shareholder agreements

As your company grows, the shareholders may need to transfer shares to new shareholders. To do this you need to:

  • Inform Companies House on the next Annual Return (you can only tell companies house who the shareholders are on an annual return so it could be a while before companies house get to know the the shareholders have changed)
  • Your Bank and Professional Advisers will need information on changes to Shareholders

Your shareholders need to be aware that if they give away shares or make a gain from selling shares they may be liable for Capital Gains Tax, however, they may be entitled to tax relief like the Entrepreneurs Tax Relief and that each year there is an exempt amount of capital gains for individuals.

steve@bicknells.net

Plan out the Key Dates for your Business Reply

There are so many things to remember when you have a company, accounting dates, vat dates, paye dates, corporation tax, self assessment dates, the list seems endless. The only way to keep on top of the dates is to put them in your diary.

I found this link http://www.businesslink.gov.uk/bdotg/action/keydates

Business Link can generate all your key dates, the results look like this

July 2012

05/07/12 Ensure agreement is reached with HM Revenue & Customs re Class 1B voluntary settlement.
Find out more: National Insurance: an introduction
PAYE and NICs
06/07/12 Ensure copies of P9D/P11D are with employees. PAYE and NICs
Submit P11D(b), P9D and P11D forms to HM Revenue & Customs.  
Report shares/securities information to HM Revenue & Customs.
Form 42 is provided by HM Revenue & Customs for this purpose.
Find out more: Share schemes – Opens in a new window
 
22/07/12 Pay PAYE, NICs, student loan deductions and deductions for payments to subcontractors for the month up to the 5th of this month electronically.
Find out more: PAYE for employers: the basics
PAYE and NICs
Pay Class 1A NICs shown to be due by your form P11D(b), electronically.  
31/07/12 If you need to make a Self Assessment payment on account, this is the date for your second payment.
You won’t have to make payments on account if your tax bill for the previous year was less than £1000, or if more than 80 per cent of your income tax for the previous year was deducted at source.
Find out more: Tax return deadlines and penalties
Self assessment

You can then print the list and pin on the wall or fridge and pop the dates in your diary.

Brilliant!

It could save you a fortune in late filing penalties

steve@bicknells.net

 

You could face a £1000 penalty for non compliant Letterheads 3

We have all been aware of this for sometime now, but Indicator have highlighted that Companies House are now taking a harder line and giving out £1000 penalties, so what are the rules:

The Companies (Trading Disclosures) Regulations 2008

(1) Every company shall disclose its registered name on—

(a)its business letters, notices and other official publications;
(b)its bills of exchange, promissory notes, endorsements and order forms;
(c)cheques purporting to be signed by or on behalf of the company;
(d)orders for money, goods or services purporting to be signed by or on behalf of the company;
(e)its bills of parcels, invoices and other demands for payment, receipts and letters of credit;
(f)its applications for licences to carry on a trade or activity; and
(g)all other forms of its business correspondence and documentation.

(2) Every company shall disclose its registered name on its websites.

http://www.legislation.gov.uk/uksi/2008/495/regulation/6/made

Letterheads: Company letterheads must show:

  1. The name of the company. This must end in “Limited” or “Ltd” or their Welsh equivalents. If the name you trade under is different in any way from the name of your company as shown on your certificate of incorporation, then the full name, including “Limited” etc must be shown on the heading, usually at the foot.
  2. The registered office. It must be identified as the registered office. If there is only one address shown on the letterhead, the words “Registered Office” can appear in small type just above or below, or you can mention it at, say, the foot of the heading by saying “Registered at the above address”, or something similar. The important point is that your registered office must be clearly identified. If this were an address other than your trading address then it would be appropriate to print the address, clearly identified as such, in small type at the foot of the letterhead and the trading address elsewhere in larger type.
  3. The registered number.
  4. Whether registered in England (or ‘England & Wales’) or Scotland.
  5. A Welsh company which has chosen “Cynfngedig” instead of “Limited” as the last word of its name must also state (in English) that it is a limited company.

http://link4business.info/2008/08/business-disclosure-requirements-information-which-must-appear-on-your-letterheads-invoices-websites-and-email-messages/

Make sure you comply, no one wants a penalty.

steve@bicknells.net

 

 

 

 

Why have multiple classes of shares? Reply

Businesses tend to start off just having ordinary shares with full voting and dividend rights, however, there are lots of good reasons why you might create multiple share classes:

1. To reward the owners based on their contribution – for example say one owner worked full time and the other only part time – they may want dividends to be based on their efforts whilst still retaining their original voting rights

2. To offer non voting shares to employees

3. Convertable or Redeemable shares might be offered to an investor

4. Preference Shares might have a fixed dividend

Dividends are very tax efficient so its great way to reward the owners for the risk of running a business.

Before creating additional share classes check your articles of association and change them if necessary, then you will need a resolution to create new share classes, fill the appropriate forms at Companies House and then are ready to go.

If you have any questions please feel free to contact me.

steve@bicknells.net