When it comes to filing your company’s accounts, there are two main options: audited accounts and small company accounts. The difference between the two is that audited accounts are subject to an independent audit, while small company accounts are not.
Audited Accounts
Audited accounts are required for all companies that are not small companies.
If your company meets any of these criteria, you are not required to have your accounts audited. However, there are some advantages to having your accounts audited, such as:
- Increased credibility with lenders and investors.
- Reduced risk of financial problems.
- Increased compliance with regulations.
Small Company Accounts
A small company is a company that meets two of the three following criteria:
- It has fewer than 50 employees.
- Its turnover is less than £10.2 million.
- Its balance sheet total is less than £5.1 million.
Small company accounts are not subject to an independent audit. Instead, they are prepared by the company’s directors and submitted to Companies House.
Although small company accounts must adhere to the appropriate accounting standards, some simplified regulations can be followed. For instance, small businesses are exempt from having their accounts audited and may utilise specific simplified depreciation methods.
FCSA Requirements for Accredited Membership
Freelancer and Contractor Services Association (FCSA) is a membership body for companies that provide professional services for contractors.. FCSA requires its Accredited Members to have their accounts audited. This is to ensure that Accredited Members meet the highest standards of compliance.
If you are considering applying for FCSA Accreditation, you must have your accounts audited by a qualified auditor. The auditor will need to issue a report that confirms that your accounts have been prepared in accordance with the relevant accounting standards and that they give a true and fair view of your financial position.
For FCSA Accreditation, we do not require that you submit audited accounts to the Companies House, however, we do require them for the Accreditation process.
Questions Raised by Micro Accounts
Some umbrella companies file micro-entity accounts with Companies House. . This raises several questions, including:
- Are these companies really meeting the criteria for a micro-entity?
- Are they using micro-entity accounts to avoid their responsibilities as employers?
- Are they putting their contractors at risk of tax liabilities?
The use of micro-entity accounts by umbrella companies is a complex issue. There is no clear consensus on whether or not it is appropriate. However, it is important for agencies and contractors to be aware of the potential risks and to ask questions about the accounts that are being used.
As FCSA require audited accounts for financial checks during accreditation assessment, this risk is mitigated by using an FCSA Accredited Member.
Filing with HMRC/Companies House
Whether you need to have your accounts audited or not, you must still file them with HMRC and Companies House. The deadlines for filing your accounts vary depending on your company’s size and structure.
You can find more information about the requirements for filing your company’s accounts on the HMRC website and the Companies House website.