If you have chosen to set up your business as a LTD company the accounting requirements upon you are more than if you were a sole trader. You are still required to fill an annual self-assessment tax return for your personal income as you would if you were a sole trader, but you also have to file company accounts.
Company accounts consist of your annual corporation tax return and your annual statutory accounts; balance sheet, profit and loss account, any notes and in most cases a director’s report. For larger companies you may have to submit an auditors report too, you can find out if you need to include one here: https://www.gov.uk/audit-exemptions-for-private-limited-companies
You need to file your corporation tax with HMRC and your statutory accounts with Companies House, although if you company does not require an auditor you can do this at the same time via HMRC or accounting software.
Corporation Tax Return
When filing you corporation tax return you will need to include details of your turnover, profits and expenses. The information submitted on this return is used to calculate any corporation tax due.
You will most likely need to submit two corporation tax returns within you for your first accounting period. This is because your first accounting period ends at the end of the month in which you registered your company. For example, if you registered your company on the 7th August 2019 your first accounting period will end 31st August 2020. Your corporation tax return cannot contain more than one years worth of information so you would need to file a corporation tax return for the period 7th August 2019 – 6th August 2020 and then 7th August 2020 – 31st August 2020. After this your accounting period will run 1st September – 31st August, and you will be able to file your corporation tax and company accounts together.
A balance sheet consists of a list of your:
Assets – cash, prepaid expenses, accounts receivables, inventory, fixed assets and marketable securities.
Liabilities – accounts payable, accrued liabilities, customer prepayments, taxes payable and debts.
Shareholders Equity – Stock, additional paid in capital, retained earnings and treasury stock
The exact items on a balance sheet vary from company to company.
Profit and Loss Account
A profit and loss account is a financial report that shows your companies income and expenditure. It first lists you income, then expenses showing both gross profit and net profit.
Director’s report is from the directors and outlines the financial performance of the company.
These are all the elements of company accounts, be sure to check your filing deadlines with Companies house. Companies are also required to submit a conformation statement annually confirming the SIC code chosen at registration are correct.