As a small business you may be able to file micro entity accounts, which could save you time and money.
Read on to find whether your company qualifies as a micro entity, how to prepare your accounts, and where to submit them.
For a micro entity accounts meaning, they're simply a way for smaller companies to file reduced accounts.
This type of accounting aims to save time for business owners, allowing them to file accounts even if they don't have specialist accounting knowledge.
For the smallest companies, filing micro entity accounts is optional. If you want to, you can still file full accounts in the same way as larger companies.
However, a benefit of choosing to file basic micro entity accounts is that you can submit an abridged version with a simplified balance sheet. Supplying a profit and loss account or director’s report is also up to you, while it’s likely you’ll be exempt from auditing.
The government describes a micro entity as a ‘very small company’. You’ll be considered a micro entity if you meet two of these three criteria:
Even if you meet the above micro entity accounts criteria, you won’t be able to abridged accounts if you’re business is any of the following:
If you don’t qualify as a micro entity, you may still be able to file accounts as a small company. Read our guide on how to file company accounts to find out more about what you need to do and the deadlines you need to meet.
It’s a legal requirement to file your company accounts each year and it can be a daunting process. If you qualify as a micro entity, here’s an overview of what you can submit:
You can also choose to ‘fillet’ your accounts, which is when you submit an even simpler version. Micro entities that file filleted accounts only have to supply a balance sheet with footnotes and a statement confirming that a profit and loss account hasn’t been submitted.
Filleting accounts reduces the amount of information on public record about your company.
Most micro entities choose to use Companies House’s online filing service. You’ll need your Government Gateway login and Companies House authentication code.
Micro entities also have the benefit of being able to use the Company Accounts and Tax Online (CATO) service, which allows you to submit your accounts to HMRC and Companies House at the same time.
You can file micro entity accounts by post, but you’ll need to prepare them earlier as postal submissions take longer to process.
While you can complete your accounts manually, you might want to hire an accountant to do it for you.
You can also use accounting software to help you fill out and format all the necessary information. Good accounting software can save you time and make sure that you’re submitting exactly what you need to.
Our guide to the best accounting software for small businesses compares the best-known suppliers and explains more about cloud accounting software.
If you’re eligible to file micro entity accounts, there are three main advantages:
This is because there’ll be less publicly available information about your company, so investors may choose to fund companies they know more about.
A micro entity account template could give you a good idea of the information you need to submit and how it needs to be laid out.
However, remember to make sure the template you’re using is right for the size of your company. You also need to make sure that the accounts you submit meet either the International Financial Reporting Standards or the New UK Generally Accepted Accounting Practice.
Sage has some example micro entity accounts on its website.
Do you use an accountant to manage your accounts and tax return? Let us know in the comments below.
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