What are statutory accounts?

Jul 3, 2024

What are statutory accounts? A guide for UK businesses

Understanding statutory accounts is crucial for businesses operating in the UK. These legal obligations and valuable tools can inform business decisions and improve financial health.

This guide will clarify statutory accounts, their benefits, and how they compare to other types of accounts. 

What are statutory accounts?

Statutory or annual accounts are financial records that limited companies must prepare at the end of each financial year. These accounts comprehensively overview a company’s financial performance and position. They include a balance sheet, a profit and loss account, and notes about the accounts. Companies must file these accounts with Companies House and HM Revenue and Customs (HMRC).

The benefits of statutory accounts

Legal compliance: The primary benefit of statutory accounts is that they ensure your company complies with UK law. Failing to submit these accounts can result in penalties and damage your company’s reputation.

Financial transparency: Statutory accounts clearly show your company’s financial health. This transparency is valuable for internal stakeholders, investors, creditors, and potential business partners.

Informed decision-making: You can make more informed business decisions with detailed financial data. Statutory accounts offer essential insights, whether you’re planning for growth, identifying cost-cutting opportunities, or evaluating the profitability of different business activities.

Investor confidence: Investors look for companies that are transparent and well-managed. Statutory accounts provide the financial information investors need to assess the viability and performance of your business.

Comparing statutory accounts to other types of accounts

While statutory accounts are mandatory for limited companies, businesses might also choose to keep management accounts. These are more detailed and often include monthly or quarterly reports. Here’s how they compare:

  • Purpose: Statutory accounts are prepared to meet legal requirements, whereas management accounts are used internally to aid in day-to-day decision-making.
  • Frequency: Statutory accounts are produced annually, while management accounts are typically prepared more frequently, such as monthly or quarterly.
  • Detail: Management accounts often provide more detailed information than statutory accounts. They might include budgets, forecasts, and performance metrics not required in statutory accounts.

The process of preparing statutory accounts

Record-keeping: Accurate and thorough record-keeping throughout the financial year is essential. This includes tracking income, expenses, assets, and liabilities.

Financial statements: At the end of the financial year, compile your financial records into key financial statements, such as the balance sheet and the profit and loss account.

Notes to the accounts: Include detailed notes that explain certain items in the accounts. These notes provide additional context and ensure the accounts give a true and fair view of the company’s financial position.

Director’s report: If your company is medium or large, you must include a director’s report outlining the company’s activities and performance during the financial year.

Filing: Submit your statutory accounts to Companies House and HMRC by the required deadlines. For most companies, the deadline is nine months after the end of the financial year.

How we can help

Preparing statutory accounts can be complex and time-consuming. That’s where we come in. At EV Accountants, we specialise in providing comprehensive accounting services tailored to your business needs. Our team of experts ensures your statutory accounts are accurate, compliant, and submitted on time.

We offer expert guidance as our team stays updated with the latest accounting standards and regulations, ensuring your accounts meet all legal requirements. We use advanced accounting software to streamline the preparation of your accounts, saving you time and reducing the risk of errors.

We understand that every business is unique. Our personalised approach means we take the time to understand your specific needs and provide tailored advice and support. With our professional services, you can focus on running your business, confident that your statutory accounts are safe.

If you need assistance with your statutory accounts, EV Accountants is here to help.

Contact us today to learn more about how we can support your business.

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