What are Company Accounts?
Company Accounts have to be filed each year with Companies House (with some exceptions),
and provide a summary of the financial performance of the company for the period
concerned and a "snapshot" of its balance sheet.
Most accounts relate to a one-year trading period, and the most common "year
end" is either 31st December (i.e. the calendar year) or 31st March (i.e.
the tax year).
The information that different sizes of companies have to provide is different.
Smaller companies are required to show less information in their accounts than
Why do Companies have to file their Accounts?
The accounts are required to be "filed" under Company law, that is
the Companies Act 1985, and the amendments which are found in the Companies
Act 1989 (together referred to as "The Companies Acts").
This requirement is because the owners of the company (the Shareholders) enjoy
the privilege of "Limited liability" - their liability for the debts
of their company is limited to their shareholding. This concept encourages investors
(shareholders) to risk their capital but to have the safety net of not having
to sell their own personal assets (such as their home) should the company they
invest in fail at a later date. There is an obvious need for those who deal
with their company (suppliers of goods and materials or money) to be able to
make a reasonably informed decision as to the extent of their involvement. The
Government recognises this need, and the requirement to file accounts is therefore
a legal one, enshrined within the Companies Act.
The accounts must be filed with Companies House (still often referred to under
its previous title of "The Companies Registry"). Companies House is
an Executive Agency of the Department of Trade and Industry.
A company whose registered office is in England and Wales must file its accounts
with Companies House head office in Cardiff. If in Scotland, at Companies House
in Edinburgh. If in Northern Ireland at Companies Registry in Belfast.
NOTE: Companies that are registered in the Isle of Man file information under
the jurisdiction of the Government of the Island, at the Companies Registry
in Douglas. Likewise, companies registered in Jersey (St.Helier); Guernsey (St.Peter
Port) and Alderney (St. Mary) file information in accordance with the law of
the Islands. These are what are known as "off shore" companies, and
there is no obligation to file accounts in any of these jurisdictions.
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