Why Do Companies Need to File Annual Accounts?
What Are Annual Accounts?
Annual accounts, also known as financial statements, are comprehensive reports on a company's activities and financial performance throughout the year. They typically include a balance sheet, income statement, cash flow statement, and a statement of changes in equity, along with explanatory notes. These accounts provide crucial insights into the company’s financial health, offering stakeholders a clear picture of its assets, liabilities, revenues, expenses, and profitability. The preparation of annual accounts is a fundamental aspect of financial transparency and accountability in business.
Legal Requirement
In the UK, companies are legally required to file annual accounts. This obligation ensures that the company is transparent about its financial status, adheres to accounting standards, and meets its tax obligations. The exact requirements and deadlines vary depending on the country and the type of company.
Company and Accounting Records
You must keep records about the company itself and financial and accounting records. Hiring a professional, like an accountant, can help with your tax. HM Revenue and Customs (HMRC) may conduct a compliance check to ensure correct tax payment. Records about the company should include details of directors, shareholders, and company secretaries, the results of shareholder votes and resolutions, debentures, indemnities, share transactions, and secured loans or mortgages. Notify Companies House if these records are stored in a location other than the company’s registered office.
You must also maintain a register of ‘people with significant control’ (PSC), including anyone with over 25% shares or voting rights, the power to appoint or remove directors, or influence over the company. Detailed accounting records must include all company transactions, assets, debts, stock, and records essential for annual accounts and tax returns. Failure to maintain proper records can result in fines or disqualification as a company director.
How Long to Keep Records
Keep records for 6 years from the end of the last financial year they relate to, or longer in certain cases, like multi-period transactions or compliance checks by HMRC. In cases where records are lost, stolen, or destroyed, attempt to recreate them and inform your Corporation Tax office immediately. This information must also be included in your Company Tax Return.
Filing with Companies House
In the UK, companies must file their annual accounts with Companies House. It's essential for companies to understand what documents and information are required for filing. While Companies House provides a platform for direct submission, the process can be complex, and knowing exactly what to do is crucial.
Standard Accounting's Online Service
For companies seeking assistance, Standard Accounting offers an online service for filing annual accounts.
- Go to the Standard Accounting search page
- Search for Your Company: Input your company name or number to find your business.
- Add Service: Select the "Prepare and file company accounts" service and add it to your order.
- Checkout: Complete the process by checking out, after which Standard Accounting will handle the preparation and filing of your accounts.
Conclusion
Filing annual accounts is not just a legal formality but a critical part of a company's operations and strategy. Whether a company chooses to file directly with entities like Companies House or use services likeStandard Accounting, understanding the importance and purpose of this process is key to maintaining good corporate standing and planning for future success.