How to file company accounts

Filing company accounts is a crucial part of running a business, and can be drawn upon when seeking future financing through business loans or other types of funding. If you’ve never done it before or you’re unsure where to start, this guide takes you through the process of filing company accounts, the deadlines for filing them, and what you need to know about preparing your accounts.

Who needs to file company accounts?

In the United States, all corporations must file annual financial statements. This is a legal requirement, whether the company makes a profit or loss, is not trading, or is dormant.

Company accounts must also be filed with the Internal Revenue Service (IRS) when you submit your corporate tax return. You can file these documents jointly with the IRS and your state’s relevant authority, usually through the IRS website or state-specific portals.

What do company accounts contain?

Company accounts show how a company has performed over a period of time (typically 12 months). They will usually contain:

• Profit and loss account: this is an income statement that sets out the calculation of your profit or loss for the reporting year.
• Balance sheet (statement of financial position): this shows the value of everything your business owns. It also shows any payments your business needs to make, as well as any money owed by debtors, that are due by the last day of the financial year covered by the accounts. 
• Notes to the accounts: this is used to further explain and break down figures in the financial statements.
• Director’s report: this contains the principle activity of the business, names of directors, details of any political and charitable donations and policies on employees. It must be dated and signed by one of the directors.

How to prepare company accounts for a small company

Smaller companies and micro-entities can choose to file a simplified version of their accounts and do not need a directors’ report or a profit and loss account. They can also use an exemption so that their accounts don’t need to be audited.

Your company will be classed as small if any two of the following apply:

• Your revenue is less than $10.2 million
• Your balance sheet is less than $5.1 million
• You have fewer than 50 employees.

Micro-entities can prepare even simpler accounts than small companies that just meet statutory minimum requirements and need only send their balance sheet to Companies House. 

Your company will be a micro-entity if any two of the following apply:

• Your revenue does not exceed $632,000
• Your balance sheet does not exceed $316,000
• You have no more than 10 employees.

Can I prepare my own limited company accounts?

Yes, you can prepare your own limited company accounts if you wish to. There’s plenty of accounting software out there to help you do this. However, most limited companies choose to hire an accountant to manage and file their accounts on their behalf. 

Limited companies have more complex structures and obligations which makes it harder to do everything yourself – and even if you do manage it, there’s a risk of making mistakes (penalties for this can be high). Hiring an accountant can help ensure you meet all the legal requirements and avoid mistakes.

Company accounts deadlines

The date by which you need to file your accounts will be determined by the date you registered your business.

If your business is new, you will need to file your first accounts within 21 months after registering your business. 

For existing companies, you will need to file within nine months after your company’s financial year ends. 

There are different deadlines for filing accounts with IRS. You will need to file your accounts when you submit your corporation tax return, with the deadline being 12 months after the end of your accounting period. 

Are there penalties for filing late?

Yes, there are penalties for filing late – the amount you pay will depend on how far past the deadline you are. The penalties for late filing with the IRS can be significant:

• If you file your tax return late, the IRS imposes a penalty of 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25% of your unpaid taxes.
• If the return is over 60 days late, the minimum penalty is $435 or 100% of the unpaid tax, whichever is less.
• Repeated late filings can lead to compounded penalties and increased scrutiny from the IRS.

Is it best to ask an accountant to compile my accounts?

This will ultimately depend on how confident you feel about compiling your own accounts and the type of business structure you have. However, generally speaking it can be safer to ask an accountant to do it for you.

Accountants are experts in business finance and will take the stress out of filing your own accounts. They can also offer business and financial advice to help you make the right decisions. Just keep in mind that even if you use an accountant, it’s still the responsibility of the directors to make sure the accounts are filed on time and that they are accurate.

How can I file my company accounts?

You can file your accounts online with the relevant authorities. In the U.S., this usually means filing through the IRS website. Before you start, you’ll need to create an account and gather all necessary authentication details. Alternatively, you can post your company’s accounts directly to the relevant state authority if electronic filing is not possible due to a valid reason.

Most businesses use the IRS online service to file their corporate tax return and accounts. To do so, you’ll need your Government Gateway ID and password. You can also choose to file your accounts with state authorities simultaneously if required.

For more information, you can visit the IRS website and your state’s business filing portal.