Running a business in Glasgow means more than just keeping track of income and expenses. Every year, you’re required to file company accounts.
But how do you actually file these accounts? Don’t worry, we’ve broken it down into simple steps to help you understand the process and avoid any fines. Let’s dive in.
What are company accounts, and why do you need to file them?
What are company accounts in the UK?
Company accounts are like a financial report card for your business. They give a snapshot of your company's finances, showing what you own, what you owe, and how much profit or loss you made during the year. They typically include:
- Balance sheet. A snapshot of what your business owns (assets) and what it owes (liabilities) at the end of the year.
- Profit and loss account. This shows whether your business made a profit or loss.
- Cash flow statement. This shows how money moves in and out of your company.
Why do you need to file company accounts?
Filing your company accounts is a legal requirement. They provide transparency to shareholders, investors, and Companies House. They also make sure your business is staying within the law. If you don’t file your accounts, your company could be fined or even shut down.
Types of company accounts in the UK
The type of company you have will determine the complexity of the accounts you need to file. Here’s a breakdown:
Micro-entities
These are the smallest companies. To qualify, you need to meet at least two of these criteria:
- Turnover of £632,000 or less
- £316,000 or less on your balance sheet
- No more than 10 employees
Small companies
For small companies in Glasgow, you must meet at least two of these:
- Turnover of £10.2 million or less
- £5.1 million or less on your balance sheet
- No more than 50 employees
Medium companies
For medium-sized companies in Glasgow, the thresholds are a bit higher:
- Turnover of £36 million or less
- £18 million or less on your balance sheet
- No more than 250 employees
Large companies
If your company is bigger than this, it’s classified as large and will need more complex accounts, including an audit.
Near term companies
The monetary thresholds determining company size will soon increase by 50%. This is part of a wider initiative to reduce the burden of legislative reporting requirements in the UK.
Deadlines for filing company accounts
First accounts
If it’s your first year in business, you have 21 months from the date you registered your company with Companies House to file your accounts.
Subsequent years
For each year after that, you must file your accounts within 9 months of your financial year-end. For example, if your financial year ends on 31st December, you need to file by 30th September the following year.
Important reminder
In the UK, you need to file with both Companies House and HMRC. These are separate filings. Missing deadlines with either could lead to penalties.
Audit requirements explained
When is an audit required in the UK?
An audit is like a financial check-up. Some companies are required to have one to make sure their accounts are accurate. You’ll need an audit if:
- You’re a medium or large company.
- Your shareholders ask for it (if they hold at least 10% of the shares).
- Your company’s rules (called articles of association) require it.
An audit helps verify that your company is following the rules and that your accounts are correct.
Step-by-step guide to filing company accounts
Filing company accounts might sound tricky, but here’s a plan for how you can do it:
Step 1 - Prepare your financial records
Gather all the important financial documents, like:
- Invoices (for both sales and expenses)
- Bank statements
- Payroll records (if you have employees)
Step 2 - Choose your accounting method
There are two ways to handle your accounts:
- Cash accounting. You report income and expenses when money actually changes hands.
- Accrual accounting. You report income and expenses when they’re agreed (even if the money hasn’t moved yet).
Step 3 - Create your financial statements
Using your records, create:
- A balance sheet
- A profit and loss account
- A cash flow statement (if required)
Step 4 - Submit to Companies House
You can file your accounts online using Companies House WebFiling. This system is designed to be straightforward, and there are simpler forms if your business qualifies as a micro-entity or small company.
Step 5 - Submit to HMRC
Along with your accounts, you’ll also need to file a Company Tax Return with HMRC. This is done through the HMRC website or through accounting software like Xero or QuickBooks.
How to file your first company accounts
Learn about your first year accounts for Companies House and Corporation Tax in this video.
Penalties and legal consequences
What happens if you miss the deadline?
If you file your accounts late, you’ll face penalties from Companies House:
- 1 day late - £150
- Up to 1 month late - £375
- 1-3 months late - £750
- More than 3 months late - £1,500
Legal consequences
If you don’t file your accounts repeatedly, your company could be struck off the Companies House register, meaning it won’t legally exist anymore. And if your company continues trading after being struck off, the directors could be personally liable for any debts.
Unsure about filing your company accounts?
Professional advice can help you avoid costly penalties for your business.
For a stress-free experience, we advise using our recommended provider.
Encourage filing early
Filing your accounts early has several benefits:
- Less stress. You can avoid the last-minute rush.
- More time for corrections. If there’s an error, you’ll have time to fix it.
- No risk of penalties. Early filing ensures you won’t miss deadlines and face fines.
Other non-compliance penalties
Not filing your accounts can cost more than just fines. Here’s what else can happen:
Damaged reputation
If your company is struck off, your reputation with creditors, suppliers, and partners could suffer. They may not want to do business with a company that doesn’t follow the rules.
Limited access to loans or funding
If your business has a history of not complying with filing deadlines, lenders or investors might see it as a high risk and refuse to provide funding.
Resources to help file your company accounts
Filing your accounts doesn’t have to be complicated. Here are some tools that can help:
Guide to choosing accounting software
Accounting software can simplify things:
- Xero - Great for small businesses. It’s easy to use and integrates with HMRC for filing.
- QuickBooks - Another popular choice with a simple interface and features for managing income and expenses.
- Sage - Ideal for larger businesses with more complex needs.
Hiring an accountant in Glasgow
If your accounts are complex or you just don’t have the time, hiring a Glasgow accountant can be a smart move. They’ll make sure everything is correct and filed on time.
Common filing errors to avoid
Here are some common mistakes businesses make when filing their company accounts:
Missing deadlines
Set reminders or use software that alerts you when deadlines are coming up to avoid hefty penalties.
Incorrect profit calculations
Make sure you carefully calculate your profit by keeping detailed records of both your income and expenses.
Incorrect classifications
Misclassifying income or expenses can lead to inaccurate accounts. If you’re unsure about something, Glasgow Accountants are here to help.
Checklist for new business owners
If you’re a new business owner, managing your accounts for the first time can be overwhelming. Here’s a checklist to keep you on track:
- Register with HMRC and Companies House
- Keep organised records of all financial transactions
- Set reminders for important filing deadlines
- Choose the right accounting software or hire an accountant in Glasgow
- Understand whether you qualify as a micro, small, medium, or large company
Final thoughts
Filing company accounts in the UK is an essential task for maintaining legal compliance and ensuring your business’s financial health is transparent.
Whether your business is small or large, understanding the specific requirements, deadlines, and the consequences of non-compliance is key to avoiding fines and potential legal trouble.
By filing early, using the right accounting software, and staying organised, you can simplify the process and reduce stress.
If your accounts are more complex, don’t hesitate to seek help from our recommnded provider TaxScouts, as their expertise can save you both time and money.
About the author
Jon Dell is a Chartered Accountant who qualified at PwC, the largest professional services firm in the world. He has worked internationally as well as across the public and private sectors. He now has his own practice where he works on both personal and Limited company taxation services. His particular focuses are property income and taxation as well as medical outsourcing companies.
