Statutory accounts are the legally required accounts that all companies must submit to Companies House every year, to reflect the financial stance of their business. The level of detail required in your statutory accounts will vary according to the size of the company, but every limited company, LLP, and PLC must file their annual accounts in a timely manner, otherwise, they risk incurring fines.
Legal Requirements for Statutory Accounts
Your first set of statutory accounts must be filed within 21 months of registering your business with Companies House. After this, your accounts need to be filed within 9 months of the end of your financial year. Even if your company is dormant, you will still need to file dormant accounts. Different-sized businesses can file their accounts with varying detail levels, but all businesses must file annual accounts. If you are a sole trader, you do not need to submit accounts to Companies House, but you do need to file a tax return within the appropriate timeframes.
Financial Statements in Statutory Accounts
A medium or large business will need to file full statutory accounts. These include; profit and loss, balance sheet, detailed notes to the accounts, accountant’s report, and a director’s report. A small or micro business can send abridged accounts, which just include a simple balance sheet and brief notes to accounts. Dormant companies need to file dormant accounts.
Reporting Standards for Statutory Accounts
All accounts must be prepared to appropriate professional standards. These must be to either the International Financial Reporting Standards or the UK Generally Accepted Accounting Practice. A professional and competent accounting firm such as ourselves here at Elver ECommerce will be producing accounts to these high standards.
Audit and Assurance for Statutory Accounts
A statutory audit is a legally required review of the accuracy of a company’s or government’s financial statements and records. Audits ensure that the information within the accounts are accurate. This is a sensible check to have in place, to make sure that your financial information is correct. Only businesses over a certain size, or within certain sectors, will be required to have an audit. You will need to arrange and pay for an external audit of your accounts, as required by law. An assurance report is a review of your accounts, highlighting any areas of issue. In most cases, there will be no reportable issues as issues will be resolved during the audit. Audits are in place to both prevent genuine accounting errors and intentional accounting fraud.
Filing and Disclosure for Statutory Accounts
You can file your accounts electronically using the Companies House portal. However, the majority of accounts will be submitted directly from accounts preparation software by accountants. Currently, you can still file your statutory accounts in paper form, but the government and HMRC are increasingly looking at online-only filing systems for the future.
What is the Difference Between Management and Statutory Accounts?
Statutory accounts are prepared in a standardised format as prescribed by law. They typically are prepared at a later date than management accounts. Management accounts can take any form as required by management in order to make them useful but typically will include more detailed analysis than statutory accounts. They will often be accompanied by financial forecasts. Generally, businesses will produce both, as the statutory accounts are a legal requirement. Management accounts, whilst optional, are an incredibly useful business resource. Statutory accounts are used to calculate the amount of corporation tax that you own. Management accounts are used by many businesses to help to make calculated and informed decisions about their business.
FAQs About Statutory Account
1. Are statutory accounts full accounts?
If you are a business of a certain size, then you must file full accounts for your statutory accounts. Smaller businesses can file abridged accounts which show less information.
2. Are statutory account audited?
Yes, if your business is not exempt, then you must have your accounts audited every year. Check with your accountants whether your business is exempt or not, as there are strict criteria for whether your business needs to have an audit.
3. Who signs statutory accounts?
Statutory accounts must be approved by the board of directors and signed on behalf of the board by a company director. This is a legally binding signature, and if a director willingly signs accounts that he knows to be false or non-compliant, he or she is committing an offence.
4. Who needs to prepare statutory accounts?
All private limited companies (Ltd), public limited companies (Plc), and limited liability partnerships (LLP) must prepare statutory accounts. Whether these need to be full statutory accounts or an abridged version will depend on the size of the company, but they must be submitted, and within the time frame as laid out under the regulations.
5. Do all companies need to have their statutory accounts audited?
There are strict criteria about which companies need to have their statutory accounts audited. Larger companies that meet two or more of the following criteria: employ over 50 employees, have a turnover of more than £10.2 million, or have assets of over £5.1 million, will need to have their statutory accounts audited once a year.
6. Are statutory accounts publicly available?
Once statutory accounts have been submitted, they are then published by Companies House. As a member of the public, you can look up any business on the Companies House website and view their statutory accounts. This can prove invaluable when making buying decisions or dealing with companies.
7. Can I prepare statutory accounts myself, or do I need an accountant?
While you could legally prepare and file your statutory accounts yourself, you would be wise to use an accountant. Accounting is a highly skilled and complex job, where people have trained for many years to achieve a high standard of professionalism. This level of knowledge and understanding means that your annual accounts will be compliant and correct. Also, a good accountant brings so much more to your business. A good accountant will save you money, help you to run your business effectively, and can provide management accounts for forecasting and future planning. Choose a professional accounting firm, such as the team here at Elver ECommerce, to work with your business.
8. Can I make amendments to already filed complete statutory accounts?
Mistakes do happen. You can make amendments to already filed accounts. Amendment accounts must be filed with Companies House.
9. What happens if you miss the deadline for filing your statutory accounts?
You could be liable for a fine if you miss the deadline for filing your statutory accounts. The penalties increases rapidly the more overdue your accounts are, so make sure you file your accounts on time.
If you are looking for a professional and supportivelimited company accountant, who will work with your business to ensure that you are fully compliant, and help your business to grow, then speak to the team at Elver ECommerce today on 01942 725419.