Statutory accounts

Balance Sheet

As mentioned above, the balance sheet shows the value of everything that your business owns, owes and owed at the year-end. The main items will include the following.

Current Assets:

• Cash and equivalents – cash is the most liquid asset and appears as the first line on a balance sheet. Cash equivalents would include items such as marketable securities.
• Accounts receivable – these are invoices that were still owed to a business at year-end. Also known as debtors.
• Inventory – this will include raw materials, work in progress, and finished goods that were in stock at year-end.

Non-current Assets:

• Property, plant and equipment – includes a company’s tangible fixed assets. You may choose to split your different types of assets line-by-line with, for example, computer equipment and machinery shown separately.
• Intangible assets – these may include patents or licenses you hold.

Current Liabilities:

• Accounts payable – also known as creditors, these are the amounts that the company owes to its suppliers at the year-end.
• Current debt – includes other non-accounts payable amounts that are due within a year.

Non-current Liabilities:

• Long term debt – this will include bank loans, for example.

Shareholders’ equity:

• Share capital – this will be the value of the funds that the shareholders have invested in the company.
• Retained earnings – this constitutes the total amount of net income that the company decides to keep and not declarer as divided.

The balance sheet must be signed by the director and provide a confirmation that it has been approved by the board.

Profit and Loss

Profit and loss, also known as the income statement, is a financial statement that summarises the revenues (sales), direct costs and expenses included during the financial year. It forms the basis for establishing a profit for the year.

Notes to the accounts

Notes to the accounts enable you to add more context to the balance sheet and profit and loss account.

Notes must include the accounting principles used in the preparation of the accounts and cover the basis of preparation and the way you represent turnover and depreciation.

In addition, you may want to provide more detail in some areas. For example, under fixed assets, you might include the cost of a new asset, and show the depreciation and net book value.

In the creditors section, you may wish to split them into the following sub-categories:

• Trade creditors
• Deferred income
• Taxes
• Other creditors

Directors’ Report

The directors’ report lists the main activities of the business, how the company performed and its prospects. It will also mention any dividends due to be paid out. It will list the names of the directors and a short description of their responsibilities.

The report must be signed by a director stating that the report has been approved by the board.

Companies which meet the following criteria do not have to provide a directors’ report in the accounts:

• Turnover of £10.2 m or less; or
• £5.1 m or less in fixed assets; and
• 50 employees or fewer

Filing your year-end accounts

Your accounts must be filed within nine months of your company’s year-end. You can always check your year-end by typing in the name of your company into the Companies House beta search box:

Find and update company information – GOV.UK (company-information.service.gov.uk)

Failure to file your accounts on time may result in a fine of up to £1,500.