Company Accounts

How it works

A company’s annual accounts are a set of documents submitted to Companies House and HMRC every year. They declare the company’s financial situation and how much tax should be paid to HMRC.

What’s in a company’s annual accounts?

Strategic Report

A strategic report contains a fair and comprehensive analysis of a company’s performance and business over the previous financial year. It also details the principal risks and uncertainties that could affect the company. Small companies are not required to produce a strategic report.

Director’s Report

A director’s report accounts the director’s judgement on the performance and state of the company. It also details their exposure to, and preparations against, the main sources of financial risk (interest rates, credit, liquidity and currency risks) to the business.

Balance sheet

A balance sheet is a financial statement of the company’s assets, liabilities and a summary of shareholder equity on the final day of the financial year. It is used to give investors an idea of value of what the company owns, how much it owes, and the amount of equity held by the company’s shareholders. In order for the balance sheet to be considered balanced, the company’s total assets must equal their total liabilities and equity accounts.

Profit & loss account

A profit and loss account states whether a company has made profit or losses over a given year. It documents all of the profits credited to the business and the various expenses debited from the business, showing the company’s net profit or losses. It can provide useful information to investors about the extent to which a company can increase profits through reducing costs or increasing revenue.

Auditor’s report

Most small companies are not required to file an auditor’s report with their company accounts. They must file a report if it states that they must do so in their articles of association or enough shareholders ask for one to be filed. In order to not have to file an auditor’s report, companies must also meet certain exemption criteria.

Notes about the accounts

Dormant companies that have never traded are still required to file dormant company accounts. If the company has traded and then becomes dormant, it must file an abbreviated balance sheet and notes about the account for every year which it has traded.