Abbreviated Accounts for Small Companies

Introduction

Some small and medium sized private companies (limited companies) are allowed to produce their annual accounts, for filing with the registrar at Companies House, in a much-reduced format known as ‘abbreviated accounts’. For this article we will only cover small business accounts, and not medium size companies.

The purpose of abbreviated accounts is a mixture of cost, time and resource. You may still want an accountant to prepare your final accounts, but the formal reporting procedure is cut by 75%, this should result in a smaller year end bill.

Further, as the accounts are basic and you were to keep your own day to day records you are not that far off completing the whole process yourself (especially if you have a bookkeeper).

The ‘other’ reason for using abbreviated accounts is to keep as much information away from others as possible. A good example – you may not want to let someone, say a customer, know how small you are, and what your financial make up is. When you are a small and growing company having every pound (£) you earn and spend reported in full can damage your future prospects, it’s sometimes better that others know nothing about your financial plight (there are of course pro’s and con’s to this statement). A bad example – to dumbfound the Inland Revenue.