Accounting & Year-End

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Company Records

You must keep records about the company itself, including:

  • directors, shareholders & company secretaries

  • the results of any shareholder votes & resolutions

  • promises for the company to repay loans at a specific date in the future (‘debentures’) & who they must be paid back to

  • promises the company makes for payments if something goes wrong & it’s the company’s fault (‘indemnities’)

  • transactions when someone buys shares in the company

  • loans or mortgages secured against the company’s assets

  • you must also keep a register of ‘people with significant control’

  • you must tell Companies House if you keep the records somewhere other than the company’s registered office address

Accounting Records

You must keep accounting records that include:

  • all money received & spent by the company, including grants & payments from coronavirus support schemes

  • details of assets owned by the company

  • debts the company owes or is owed

  • stock the company owns at the end of the financial year

  • the stock takings you used to work out the stock figure

  • all goods bought & sold

  • who you bought & sold them to & from (unless a retail business)

You must also keep any other financial records, information and calculations you need to prepare & file your annual accounts and Company Tax Return. This includes: receipts, petty cash books, orders, delivery notes, invoices, contracts, sales books, till rolls, bank statements & relevant correspondence.

Annual Obligations

 

Confirmation Statement

This is a statement you must file with Companies House confirming the information that they hold for your company is up to date. Your company must deliver a confirmation statement even if dormant.

Annual Accounts

Every limited company must provide a breakdown of the financial performance over the accounting year. A dormant company must file dormant company accounts instead. File to Companies House & HMRC as part of your Company Tax Return. First accounts are due 21 months after your incorporation date & then 9 months from your Accounting Reference Date

Corporation Tax

Your company or association must file a Company Tax Return if you get a ‘notice to deliver a Company Tax Return’ from HMRC.

 

Key Financial Statements include the following:

Statement of Financial Position, also known as the Balance Sheet, presents the financial position of an entity at a given date. It is comprised of the following three elements:

  • Assets: something a business owns or controls (e.g. cash, inventory, plant and machinery, etc).

  • Liabilities: something a business owes to someone (e.g. creditors, bank loans, etc).

  • Equity: what the business owes to its owners. This represents the amount of capital that remains in the business after its assets are used to pay off its outstanding liabilities. Equity therefore represents the difference between the assets & liabilities.

Income Statement, also known as the Profit & Loss Account, reports the company’s financial performance in terms of net profit or loss over a specified period. It's includes the following elements:

  • Income: what the business has earned over a period (e.g. sales revenue, dividend income, etc).

  • Expense: the cost incurred by the business over a period (e.g. salaries, depreciation, rental fees etc).

  • Net profit (or loss): arrived at by deducting expenses from income.

Cash Flow Statement, presents the movement in cash & bank balances over a period. The movement in cash flows is classified into the following segments:

  • Operating Activities: represents the cash flow from primary activities of a business.

  • Investing Activities: represents cash flow from the purchase & sale of assets other than inventories (e.g. purchase of a factory plant).

  • Financing Activities: represents cash flow generated or spent on raising & repaying share capital & debt, along with the payment of interest and dividends.