What are Abbreviated Accounts

While all businesses are required to prepare statutory accounts at the end of the fiscal year, many small businesses have historically filed 'abbreviated accounts with Companies House rather than full accounts.

What are Abbreviated Accounts?Abbreviated accounts were popular with small businesses, in part because they required significantly less information than full accounts, preventing competitors and the general public from viewing detailed information about your business.

Businesses were defined as small if they possessed at least two of the following:1. annual revenue of less than £6.5 million2. a balance sheet total of less than £3.26 million3. fewer than 50 employees.

If a business met two of these criteria for two consecutive fiscal years, it was eligible to use abbreviated accounts.This meant that, while statutory accounts – which include a complete balance sheet (ie the value of everything the company owns, owes, and is owed), a complete profit and loss statement, notes to the accounts, a director's report, and (where applicable) a full audit report – were required to be sent to all shareholders, those who attend company meetings, and to HMRC, the accounts filed with Compan were not.They were only required to include a basic balance sheet, which detailed your business's assets (such as bank accounts, equipment, vehicles, and any debtors) and liabilities (such as loans, overdrafts, and any money owed to suppliers), providing a snapshot of your business's net value.

Changes affecting small businessesOne significant change made by the new regulations is a revision to the definition of a'small business,' which may allow many more businesses to take advantage of the new account filing options. While the employee threshold remains unchanged (no more than 50), small businesses are now defined as having a revenue of less than £10.2 million (previously £6.5 million) and a balance sheet of less than £5.1 million (previously 3.26 million). As previously stated, businesses must meet two of these three criteria to qualify as small.

Small-scale organisations

Very small businesses referred to as macro-entities, hire the services of small business accountants in London for preparing a balance sheet and profit and loss account with even less detail and avoiding the necessity to prepare a directors' report. Micro-entities are defined as businesses that meet at least two of the following requirements:

1. a turnover of no more than £632,000 per year2. a balance sheet total of no more than £316,000 per year3. workforce of no more than ten people.