Can I prepare my own limited accounts?

Limited businesses registered with Companies House must submit accounts – including their balance sheet and profit and loss statement – after the end of each financial year.

The rules and audit requirements vary, depending on the size of the business. Here we’ll look at what’s included in a set of limited accounts, who can prepare them, and the requisite information.

Skip through the questions below or read on to find out more! 

• What are limited accounts?
• Which businesses need to prepare limited accounts?
• What should be included in limited accounts?
• How do I submit limited accounts?

Whether you call them limited accounts, statutory accounts or company accounts, these documents summarise the records of a business for the last financial year.

This record-keeping includes details of:

• Cash spent by the business: receipts, petty cash books, accounts payable, purchases and supplier costs.
• Income received: loans and funding, refunds, invoice earnings, contracts, and sales books.
• Changes to assets owned: bank account balances, loan agreements, long-term liabilities, depreciation, asset valuations, and debts.

As the name suggests, limited accounts refer to the mandatory records submitted by limited companies once per year.

You are legally obligated to file annual accounts if you’re trading as a limited company, but this doesn’t apply to sole traders and self-employed businesses. 

The annual financial reporting process is a lawful responsibility of running a limited company. 

You can submit limited accounts yourself if you have good bookkeeping management. 

However, there are penalties for incorrect reporting, failure to keep adequate records or late submission, so you may opt to hire an accountant to help you with this essential task. 

Annual accounts form the basis of most credit assessments, so professional support can help ensure compliance and give you back valuable time to focus on other tasks. 

When it comes to preparing limited accounts, there are some exceptions based on the company size, so you might be permitted to file abbreviated financial statements or forgo an independent audit if you are a micro-entity or a small business.

Micro-entities must meet two of the following criteria:

• A turnover of no more than £632,000.
• Balance sheet net value of £316,000 or less.
• No more than ten employees.

Small businesses must meet two of the following:

• A turnover of a maximum of £10.2 million.
• No more than a £5.1 million balance sheet value.
• Up to 50 employees.

Micro-entities are allowed to prepare simpler accounts and only need to file their balance sheet. Small companies do not require an audit of their accounts and can choose whether they want to submit a director’s profit and loss report to Companies House. 

Limited accounts, notwithstanding smaller company exemptions as above, should include:

• A company information sheet, including the company name and registration number, registered office address, and names of the directors and accountant where applicable. 
• Balance sheet reporting, demonstrating the value of all assets, including accounts receivable, all liabilities and accounts payable, and the equity held by the shareholders.
• A profit and loss statement, setting out sales, operating costs, accrued costs, expenses, and the net profit or loss made in the year. 
• Any necessary notes, such as changes to accounting policies or year-end dates.

Larger companies must appoint an auditor to verify the authenticity of their limited accounts, and the auditor’s report is included in this mandatory submission. 

Businesses of this size must also include cash flow statements.

Other documents include the director’s report, a prior year performance report, and a statement about the goals for future trading, with details of dividends that have been declared or paid out to shareholders. 

Every limited company has a filing deadline, depending on your financial year – i.e. the 12 months that make up your reported trading period.

When you first incorporate a company, the financial period begins on the same day, and you have up to 21 months to file your first set of accounts with Companies House.

After that, your trading year runs for 12 calendar months, and you can choose the dates the period starts. For example, if your financial year starts on 1st June, you will prepare accounts annually from 1st June to 31st May.

The submission deadline is nine months after the end of the financial year, and Corporation Tax falls due a day later. 

You can submit your accounts online to HMRC and Companies House simultaneously or enter each submission individually. You can find the correct links here on the HMRC website.

One of the crucial elements is to ensure your accounting software has the functionality to submit accounts online, as most statements should be uploaded electronically through the CATO or WebFiling systems or with an exported file from a compatible programme.

Setting up a Countingup business current account allows you to manage all your financial data in one app. The inclusive free accounting software will help streamline preparing balance sheets, profit and loss accounts, cash flow statements and performance reports.

The app is designed specifically to make accounting accessible for all small businesses, with real-time insights to help you monitor trading and make fast, effective financial decisions. 

One of the most complex parts of preparing limited accounts is ensuring you have assigned every income and expense transaction to the correct code in your Chart of Accounts. A responsive, smart app that intuitively recognises these events can save hours and keep your transactions up to date on the go.

Download the Countingup app today, and apply for your business current account in minutes with only proof of your ID and a selfie required. Download the app here.