Statutory accounts are a set of financial reports that companies put together at the end of each fiscal year to provide different financial measurements and related disclosures for submission with Companies House. It is sometimes referred to as financial statements or annual accounts. In the United Kingdom, statutory accounts are mandatory for all private limited companies. Statutory accounts are primarily used to notify shareholders about the company’s financial performance and to ensure that financial reporting regulations are followed.
Essential Components of Statutory Accounts
Balance Sheet:
To prepare statutory accounts balance sheet is one of the most essential things. As it shows company’s assets, liabilities and shareholders equity for the specific year. Through balance sheet data shareholder’s get an idea about company’s financial position. Balance sheet also gives a quick information about company’s overall performance. Whether, company has earned profit or incurred loss for the specific year.
Director’s report:
It is a report that provides an overview of your company’s primary operations, profitability and future prospects. It also includes information on any potential dividend payments to shareholders. The report includes a list of directors’ names and a brief description of their roles for the reporting year.
This section gives you the chance to reflect on the previous year and discuss your financial performance, business circumstances, and any events that might have an impact on the balance sheet. An examination of the outlook for the upcoming 12 months can come after this. Signing the report and indicating that the board has approved it is the responsibility of a director.
Income statement:
It is also known as profit loss statement it is a financial statement that gives information about how much money company has earned in the specific year. Income statement should include revenues, expenses and profit or losses.
Notes to the accounts:
You can add more context and information to the balance sheet or profit and loss account by adding notes to the accounts. A summary of your accounting principles, which should contain the foundation for preparation as well as the manner in which you depict depreciation and turnover, must be included in the notes.
You can indicate, for instance, whether money is owing to a bank, a business, or the tax authorities by appending numbers to particular values in the balance sheet or profit and loss account. You might go into further detail under taxable fixed assets, including the cost of a new asset and displaying depreciation and net book value. Divide the category of creditors into four groups: trade creditors, deferred income, taxes, and other creditors.
Types of Statutory Accounts:
Full Accounts:
A full set of accounts comprises all reports, including balance sheets, directors’ reports (which offer additional crucial information about the company), accountants’ reports, thorough notes to the accounts, and profit and loss statements.
Abridged Accounts:
Businesses that fit the requirements for tiny or micro entities are able to submit the Abridged Accounts, which are a condensed version of the complete accounts. These have fewer notes to the accounts, a simpler balance sheet, and less information about the company. A profit and loss statement conceals a great deal of information about the company.
Dormant Accounts:
A business is considered dormant if it has not had any “significant transactions” during the accounting period or if it has been established but has not yet engaged in any trading.
Why Statutory Accounts is Important?
Compliance with legal and regulatory requirements: Statutory Accounts is the most crucial thing to fulfil the legal requirements that regulators have outlined for
businesses. Companies demonstrate commitment, transparency and accountability by maintaining up to date records and presenting them on time. Additionally, compliance avoids the possibility of fines, penalties, or criminal charges and preserves the organisation’s standing and reputation with regulators and stakeholders.
Provides transparency and accountability: Businesses can win over investors, creditors, and shareholders by presenting a complete picture of their financial performance and condition through statutory accounts, which serve as the cornerstone of financial transparency.
Building confidence and a positive reputation, the open reporting system enables people and organisations to make well-informed decisions about lending money, investing, or forming commercial partnerships with the company.
Furthermore, statutory accounts offer an accountability framework through which directors and management are overseen and managed to guarantee that they uphold their fiduciary obligations and continue to act in the best interests of shareholders.
When statutory accounts should be filed?
In UK, statutory accounts must be submitted to Companies House, the relevant regulatory authority, every year in the ninth month for private limited businesses and the sixth month for public limited companies after the end of the fiscal year.
Typically, the corporation was founded on the last day of the fiscal year. It can, however, be changed at any time to any other date that the directors of the firm choose. Statutory accounts must be submitted by the rigorous deadlines; those who fail to do so risk penalties, fines, and legal action can be taken. In order to comply with UK legal and state requirements, timely submission of paperwork is essential.
Require an Accountant? Choose CoxHinkins
Making statutory accounts can be difficult and time-consuming too. If by chance any mistake happens while preparing the report it may charge you fines. Instead of preparing statement by yourself take assistance from the experts to make work easier.
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Disclaimer: Kindly note this blog provides general information and should not be considered financial advice. We recommend consulting a qualified financial advisor for personalised guidance. We are not responsible for any actions taken based on this content.
