Are you associated with a general partnership, a limited company or operating your business as a sole trader? Regardless of the type of your business structure to carry out, you will be asked to submit the required documentation to the companies house as well as HMRC. The details of documentation may require tax information or general business details. For the completion of this process, you need to know the updated information about abbreviated accounts and what is an abridged account?

By the end of a financial year, your company is required to share statutory accounts with the shareholders as well as with HMRC. This will get you ensured that the amount of tax you are paying is accurate. This will further help to realise the financial health of your business. In the case of large businesses, the purpose of sharing their details with companies house is to make their financial health public.

On the other hand, the smaller businesses, enjoy the easy go in this matter. This is because they were previously allowed to submit abbreviated accounts with few details in comparison to the large business. However, later there have been a few changes observed in the UK law that removed the eligibility of submitting the abbreviation accounts. Moreover, with the new changes in law, people are still confused about the regulations to be followed regarding abbreviations and abridged accounts.

Further in the discussion, you will explore the facts about abbreviated and abridged accounts as well as the eligibility criteria to qualify for abridged accounts.

Reach out to our young, clever and tech-driven team members to learn the eligibility criteria for abridged accounts. Call us on 02086868876 or email us today.

What are Abbreviated Accounts

In simple words, the use of abbreviated accounts is used to allow individuals who carry out small business to give a few details like the basic balance sheet to the companies house. Which is considered a simple snapshot of the liabilities and assets of the business. A little detail of the business net value was added as well. Later in 2016, small businesses are not allowed anymore to use abbreviated accounts.

Are you wondering about the alternative method to what you use instead of the abbreviated accounts in case you are running a small business?  The way forward was guided by the micro-entity accounts or abridged accounts. Let’s explore further what is an abridged account?

What Is Abridged Account?

Abridged accounts refer to the information that is a bit more detailed than the information provided in abbreviated accounts. However, it is still not enough if we compare it with the full year-end accounts. This is because the year-end full account requires a profit and loss account as well as a full balance sheet. It further includes the director’s report and relevant account notes.

With the details provided in the abridged accounts, you can not expose your business’s net profit. Furthermore, the breakdown of your debtors and creditors, or your fixed accounts is not required to be added to the balance sheet. According to the updated company law in the UK, you will decide whether you will abridge accounts in the process of preparation or not. A list of criteria to be eligible and qualify is to be considered as well.

Eligibility Criteria to Qualify For Abridged Account or Micro-Entity Account

In case you aim to file a micro-entity account or the abridged account with companies house and HMRC, you need to consider the eligibility criteria to ensure that you qualify successfully.

In the case of abridged accounts, the criteria you need to meet involve the following factors:

• You are not allowed to have more employees than 50 in your company.
• The balance sheet must not cross the figure of £5.1 million.
• The turnover of your business should not be more than £10.2 million.

On the other hand, if you aim to qualify for a micro-entity account, the following factors are involved to meet the criteria:

• You are not allowed to hire more than ten employees.
• The limit is £316,000 which should not be crossed in the balance sheet.
• The turnover of your business should not go above £632,0000.

The question that arises here is how can you file the accounts? In case you are filing a micro-entity account, you are simply required to sign up for a web filing service. Once you successfully log in, you need to choose the account type and further you will be taken through to complete the process.

In the case of filing an abridged account, you have multiple options from which you can choose. The first is the same as above to log in to the web filing service and choose the right account type. The other option is that you can join the filing service of companies house HMRC. Furthermore, a government gateway account is needed to complete the process. The file can be sent to HMRC. The last option is that you can avail the opportunity of third-party software. Filing regularly will be a lot more beneficial.

The Bottom Line

Now that you have gathered a fair amount of information about ‘what is an abridged account’, we can bring the discussion toward wrapping up. To sum up we can say that abridged accounts can be an easy process to go through if you follow the relevant criteria instructions religiously and provide the required details promptly. Otherwise, you will find it complicated which might lead to the need for a professional to ensure the seamless working of the process. We hope these few minutes of reading have helped to develop a better understanding and to make you capable of filing the account in the right way.

Get in touch with one of our experts if you are stuck with your micro-entity accounts. We will offer to provide instant help. 

Disclaimer: The information about ‘what is an abridged account’ is provided in this blog including text and graphics in general. It does not intend to disregard any of the professional advice.