A Comprehensive Guide for Statutory Accounts

What are Statutory Accounts?

Widely known as annual accounts, statutory accounts are a set of financial statements/reports that every company registered with Companies House makes at the end of the financial year. These reports contain the financial status and measures taken and are filed with Companies House. In the UK, it is compulsory for all private limited companies to prepare and file statutory accounts with Companies House.

One of the main objectives of statutory accounts is to ensure compliance with financial reporting standards. They also help maintain transparency with stakeholders by disclosing information about the firm’s financial performance.

Statutory accounts of your client companies cannot be skipped, but let’s admit it is a time-consuming and complex process, especially for accounting firms and practices handling statutory accounts of big companies. Even if you are handling accounts of multiple small companies, the results will be the same.

To relieve you of this time-consuming and stressful work, we have started offering statutory accounts services through statutory accounts specialists. Through them, we can ensure that your client’s statutory requirements are fully compliant. Our services can help you focus on other essential accounting activities.

Why Do You Need Our Services?

Apart from making and submitting annual statutory accounts for your client companies, you must comply with multiple accounting standards and reporting requirements. These requirements cannot be handled alone, and you will require experts in this process.

The information provided through these financial reports will be viewed publicly via the Companies House website. Therefore, you must prepare financial reports accurately because it can affect your client’s business relationships with suppliers, creditors, and other commercial connections.

To make your statutory accounts more accurate, fast, and without straining your resources, you can outsource them to Corient Business Solutions. We can prepare and submit statutory accounts on your behalf and in proper order. We will also maintain full compliance as per Companies House so that there is no complication for you or your client companies.

What is Included in Statutory Accounts?

Statutory accounts show a company’s financial performance and status for the year. That’s why the main components inside a statutory account include a profit and loss statement, a balance sheet, and a cash flow statement. Furthermore, the director’s reports and company details must also be included.

Let’s go through each of them in detail:

Company Information

The company information page will contain the following information.

• Company name
• Registered number
• Registered office address
• Director’s names
• Details of your accountant

Director’s Report

The director’s report contains the following information.

• Performance
• Business Outlook
• Dividends payable
• Director’s names and responsibilities

Balance Sheet

Balance sheets contain a complete overview of the company’s assets, liabilities, and equity at the year-end.

The assets can include:

• Land and buildings
• Property, plant and machinery
• Investment property
• Other investments
• Stocks
• Debtors, including accounts receivable
• Cash
• Bank accounts

Liabilities can include:

• Bank loans
• Bank overdrafts
• Accounts payable
• Corporation tax
• VAT
• Payroll liabilities

Equity can include:

• Retained earnings, distributable and non-distributable
• Share capital
• Share premium

A balance sheet will also have the figures for the current year and the previous year to make a comparative analysis. Explanatory notes can also be added if required.

Profit and Loss Statement

Under the profit and loss statement, you will learn how much the business has earned and how the expenses for the accounting year were. The key figures included in a profit and loss statement are as follows:

• Turnover
• Cost of sales
• Gross profit
• Administrative expenses
• Operating profit
• Profit on ordinary activities before taxation
• Tax on ordinary activities
• Profit for the financial year

With these figures, your client will be in a position to understand things:

• When and how the business is most and least profitable
• Chances to reduce costs
• Profit margins

Cash Flow Statement

In a cash flow statement, you will get a detailed flow of the money coming in and going out of your client’s company in a given period. Under the cash flow statement comes the following things:

• Cash flow from operations, i.e., from cash payments from customers and payments made to suppliers
• Cash flow from finance, which mainly comes from investors, and dividends to shareholders
• Cash flow generated from investments, i.e., mainly from buying and selling of assets

While directors’ reports and cash flow statements are not compulsory for small companies, we still provide them because they can be useful tools for you and the client company in making better decisions.

Notes to Accounts

Additional information can be provided through notes to accounts, such as information on the accounting policies used, preparation basis, depreciation method, and policy for recognising turnover.

Difference Between Statutory Accounts and Management Accounts

One of the major differences between statutory accounts and management accounts is their bindingness. Statutory accounts must be complied with, but management accounts are optional.

Statutory accounts are compulsory in nature because it provides a complete financial overview of a company and it must be filed with Companies House. This information available on the website of Companies House can viewed by stakeholders, investors, and partners.

On the other hand, management accounts are prepared only for internal use, that is, for your clients only. They will normally contain a profit and loss report and a balance sheet. There is no need to submit with or follow the rules of Companies House or HMRC, and they can be tailored as per your needs.

Conclusion

We hope this blog has helped you understand statutory accounts and their importance. Currently, new companies are required to file the accounts 21 months after they are incorporated. For other companies, it is nine months after the end of the company’s financial year. Any delay in filing will lead to fines and legal proceedings against the director.

Certainly, you would not want your clients in this situation, and we would not want you to get overburdened with such time-consuming and complex responsibilities. That’s why if you are looking for help, you should contact Corient’s statutory accounts services.

Besides statutory accounts, we specialise in offering tailored accounting services for accounting practices. Our teams have vast experience in Sage, QuickBooks, Brightpay, Xero, Moneysoft, Earnie, and Star Payroll. Our year-end, VAT, payroll, and bookkeeping outsourcing services are designed to give your practice an edge in the market, thus saving you time to invest in other important tasks. We can connect at your convenience by phone or online meeting to discuss our services in detail.