There are a variety of different accounts that you may need to file with the Companies House, whether it be dormant accounts, full accounts, micro-entity accounts, and of course, abridged accounts.
But what exactly are abridged accounts? What’s included in them? And when do you file them with HMRC?
Keep reading to learn more about abridged accounts, and for the answers to your questions.
What Are Abridged Accounts?
By law, all businesses in the UK are required to prepare statutory accounts at the end of each year.
Historically, small businesses would submit abbreviated accounts as opposed to full accounts. These accounts are shorter than regular accounts, which made it easier for smaller businesses to record their finances. Small businesses only needed to include a small and simple balanced sheet that shows their liabilities and assets.
Abbreviated accounts were abolished back in 2016 (1st Jan 2016). However, the fact that abbreviated accounts were abolished doesn’t mean that your business is required to include all financial information while filing your accounts.
This is where abridged accounts come in – they are essentially a replacement for abbreviated accounts. Abridged accounts require far less information than regular full accounts, making them ideal for small businesses that don’t have much financial information or businesses that would rather limit the amount of financial information that the public can get hold of.
What Should I Include In Abridged Accounts?
Abridged accounts require less information and detail than full accounts – and this is mostly because they don’t require a breakdown of the items included on your balance sheet.
However, you do need to include the balance sheet and any notes that are relevant to the balance sheet.
On the balance sheet, you should include the name and signature of a director of the business. You may also want to include a directors report. This is essentially a document that directors produce which gives information about the company, including its compliance with financial standards and accounting.
In the abridged account, you may also want to include a basic profit and loss account to give the Companies House an insight as to your finances.
Unlike full accounts, abridged accounts don’t require a breakdown of your business’s creditors, debtors, and fixed assets, which also means that you don’t need to include information on your corporate tax figures.
This is perfect if you don’t want your business’s competitors to guess your net profit and you want to keep your corporation tax figures private.
If you prefer, you can choose to fillet your accounts, meaning that the profit and loss information, as well as the director’s report, won’t be included in the Companies House details for your business.
Do I File Abridged Accounts With HMRC?
If you’d rather file an abridged account with the Companies House, then your business must meet certain criteria.
First of all, the turnover of your business mustn’t be higher than £10.2 million. Secondly, the total of your balance sheet shouldn’t be higher than £5.1 million. The third criteria is that your average number of employees shouldn’t be higher than 50.
Your business must meet at least two of these if you want to file abridged accounts. However, you must only send an abridged account if all of the members of your company agree.
In your abridged accounts, you’re required to include a statement on the balance sheet that states that all your company members have agreed to abridge the accounts.
What About Micro Entity Accounts?
If your company is even smaller, then you may have another option that includes less information than micro-entity accounts.
Micro-entity accounts are perfect for super small companies (aka micro-entities) – and they’re easier to submit than abridged accounts and of course, full accounts.
With a micro-entity account, you’ll only need to prepare your balance sheet as well as the profit and loss account – and these will be in less detail than an abridged account.
However, like with abridged accounts, your business will need to meet certain criteria in order to file a micro-entity account. More specifically, your business will need to meet just two of these three requirements.
First of all, you can only file a micro-entity account if your turnover is less than £632,000, if your balance sheet isn’t higher than £316,000, or if you have no more than 10 employees.
Click here if you’re looking for some help sorting your accounts.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.