Small business accounts, like it says on the tin, are accounts for small businesses. Surprising isn’t it? Feel like you’ve had the world pulled out from under your feet yet?
Sarcasm aside, there are actually differences between small business accounts and the type of tax returns you would have to file if you were a Sole Trader or large limited company. No need to panic yourself though, the kind of accounts you need to file for small businesses are some of the simplest you’ll ever see (not including Sole Traders of course).
So what exactly is needed to file and complete a small business account? There are two essential parts that need to be completed:
- Full record of your annual accounts.
- Your Company tax return.
(Remember, this is the requirements for small businesses which would be Limited Companies. Sole Trader’s would simply have to fill out a self-assessment form)
Sounds easy enough, but it’s worth knowing what each of these returns entail so you can make sure you get the right first time.
Your annual accounts (also known as Statutory Accounts) are a collection of your business’s financial records at the end of your financial year (see below how to figure out when your financial year ends).
Your annual accounts need to include records of the following:
- Your balance sheet. This should show the value of everything that your business owns, owes to others, and is owed by others as of the last day of the financial year.
- A sheet with your business’s sales, including running costs and how much profit (or loss) has been made over the year.
- Any notes you’d like to add onto the accounts.
- A report from the director.
Your annual accounts should essentially show the amount of money you have made and spent over the financial year. You will also need to include any details about money you owe or money that is owed to you, as HMRC might see this as a Bad Debt (which can be written off as an expense).
You will also need to send your Annual Accounts to several people/agencies, including:
- Companies House
- All shareholders of your business
- People who can attend your business’s general meetings
That’s all you need to do for your Annual Accounts. Like I said earlier, it’s not overly difficult, there’s just a lot to remember.
Company Tax Return
Along with your Annual Accounts, you also have to send off a Company Tax Return at the end of your accounting period (see below table for periods). If you miss this deadline, you will have to pay a hefty fine to HMRC, which is why it’s so important to try and get it right first time.
You have to file a corporation tax return no matter what, even if your business has made a loss or has no corporation tax to pay.
You will have to include the following with your Corporation Tax Return:
- Any profit or less for corporation tax (this is not the same as the profit or less shown in your Annual Accounts)
- Your corporation tax bill
It is highly recommended that you get an accountant to help you with these tax returns. They can be rather tricky and getting them wrong can lead to a delay in processing them, which would lead to your accounts being processed late and a fine.
Both your Annual Accounts and your Corporation Tax Return need to be handed in to HMRC (as well as others with your Annual Accounts) by the end of your financial period. Your financial period differs depending on when you first registered your business and since everything has a unique timing we decided to throw together a table to help:
|Financial year||12 months (reoccurring) after your business was registered|
|First accounts with Companies House||21 months after you registered your business|
|Annual Accounts with Companies House||9 months after your financial year ends|
|Accounting period||Same as your financial year|
|Corporation Tax||9 months and 1 day after your accounting period ends|
|Company tax return||12 months after your accounting period ends|
Remember that these dates are based on when your business was registered. HMRC provides very little in the way of room-for-error, so keeping these dates in mind are quite important for a successful small business.
If this all seems overwhelming (which is quite understandable), it might be worth hiring an online accountant who will assist you with this all your tax returns. Zooconomic accountants have a wealth of experience when dealing when small business tax returns and will do most of the complex work for you.
For more information call 0800 0460 560