Publishing the Accounts

Every company needs to prepare accounts which it can publish. The primary responsibility to do this is that of the director or directors. It is quite legal for them to prepare and publish their own accounts, and this may be seen if one of the directors happens to be a qualified accountant. Otherwise the directors will use the services of a public accountant such as David Porthouse and Co. The rules on company accounts are complicated and definitely not for beginners!

Each shareholder is entitled to one copy of the published accounts, which comprise a profit and loss account and a balance sheet along with a directors’ report and notes to the accounts. Even if a company has a sole director and a sole shareholder, these circulating accounts need to be produced because HM Revenue and Customs may ask to see a copy of them.

These circulating accounts do not need to be shown to anyone else, so they are only half-published. A company which is also a limited company needs to file accounts at Companies House, but small companies only need to file a balance sheet. Anyone can then go on the Companies House website and download a copy of the balance sheet. This includes your competitors and your creditors. The point of this is that it is a service to your creditors since you have limited liability and they may want to know what sort of risk it is to give you credit.

You also need to file a corporation tax return with HM Revenue and Customs, and this needs to be accompanied by a set of accounts in a special iXBRL format. This format is a kind of HTML which you can look at on a web browser, but it has additional tags which mean something to the Revenue but which are not shown by the typical browser. Generally iXBRL is so complicated that it needs to be generated by computer software, whereas ordinary HTML can be written by hand as an alternative to generating it by software. It is typically only public accountants like us who have the software which can produce iXBRL and then submit accounts to the Revenue. After we submit the tax return and the accounts, we make a point of visiting the Revenue website after 24 hours to check that it has been done correctly. Generally the Revenue website provides a good service for corporation tax payers (or at least for their accountants to be able to check everything). This is more than can be said for other taxes.

If someone lends money to the company, they may ask to see the circulating accounts with the profit and loss account and the balance sheet as a condition of making the loan. They can check that the balance sheet at least agrees with what they can download from Companies House. The accounts produced by David Porthouse and Co can be quite colourful and include the client’s letterhead. At the same time, this letterhead can be installed in the company’s debt collection system to make it clear that this is a company which is well-managed. Our colourful accounts are not just a gimmick.

Company accounts may also be known as financial statements. They can sometimes include an additional cash flow statement and other types of statement. The accounts of large companies are usually like glossy corporate brochures which advertise the company as much as they report on its financial performance. The accounts of a military vehicles manufacturer can be full of pictures of the products which make them look more like the Boys’ Own Paper. Our own accounts include the letterhead and any motto or slogan, but we don’t take things too far. We will do a free cash flow statement if we think it would be useful.

It’s nice for us when we have several clients for their accounts to be obviously different from each other, colourful and customised a bit. It reflects the service we try to provide. We enjoy being accountants.