A disadvantage of running a limited company is that financial information is available to the public. However, micro-entities and small companies do not have to file a profit and loss account, so available information is somewhat restricted. This situation is set to change.
The information now filed by a micro-entity at Companies House can be as little as just three figures: total fixed assets, current assets and current liabilities. If a company provides services, with profits largely withdrawn as remuneration, these figures could all be negligible.
Thresholds
For a company to be categorized as either a micro-entity or small company, it has to be below any two of three thresholds for turnover, balance sheet total (total of fixed and current assets) and average number of employees:
Micro-entity | Small company | |
Turnover | £632,000 | £10.2 million |
Balance sheet total | £316,000 | £5.1 million |
Employees | 10 | 50 |
A company can continue to qualify under either definition if it momentarily fails to meet the criteria for just the one year.
Changes
The main change in the government’s white paper, Corporate Transparency and Register Reform, published in February – setting out its concluding position on reform ahead of introducing legislation – is that micro-entities and small companies will need to file their profit and loss account. This means that sensitive commercial information will be freely available to a company’s competition. Employees, customers, family members and any other interested parties will also be able to see how profitable a company is. In addition, small companies:
will lose the option of preparing abridged accounts, so a full balance sheet will be required; and
will have to file a directors’ report.
Though it will be some time before the prolonged filing requirements come into effect, they are an additional deliberation when setting up a new business or determining if to incorporate an existing business.
Companies House accounts guidance can be found here.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
