The size of your business defines how much information you need to submit to the public registrar. Some owners are open about their businesses and will submit full accounts for anyone to read. But others prefer to submit a ‘short’ version.
The rules defining who can do this have changed. Now new small company reporting limits have been set as part of the Companies, Partnership and Groups (Accounts and Reports) Regulations 2015.
In this article, we look at whether you have to show your knickers..
Small company definitions
Small companies are defined if they satisfy the following reporting limits:
- Annual turnover of less than £10.2m (previously £6.5m), and
- Balance sheet total of less than £5.1m (previously £3.26m), and
- Fewer than 50 employees (unchanged)
The changes allows an estimated 11,000 additional companies can take advantage of these new reporting limits to submit shorter, abbreviated accounts to Companies House for financial years starting on or after 1st January 2016.
Directors can adopt the new rules early and apply to accounting periods commencing on or after 1st January 2015 to take advantage of a simpler reporting regime.
The option of early adoption means that a company that is currently medium-sized but which would be defined as small under the new limits can move directly to FRS 102, with reduced disclosure for small companies, without having to apply FRS 102 in full for 2015 before being re-classified as small in 2016.
Audit exemption thresholds
The new thresholds also apply for audit exemption purposes for financial periods commencing on or after 1st January 2016. However, early implementation of the audit exemption will not be permissible. So, if a company adopts the new thresholds for accounts reporting purposes for periods commencing on or after 1st January 2015, it will NOT be exempt from an audit in that period.
A further change under the new rules means that the inclusion of a public company within a group no longer renders the entire group ineligible for small company reporting exemptions or for audit exemption.
Medium-sized company reporting limits
Medium-sized companies are now defined as:
- Annual turnover of less than £36m (previously £25.9m), and
- Balance sheet total of less than £18m (previously £12.9m) and
- Fewer than 250 employees (unchanged)