Company tax return vs company accounts?

If you’re running a business in the UK, you might be curious about the difference between company accounts and a company tax return.

They sound similar, right? Well, they actually serve pretty different purposes when it comes to your finances and taxes.

To help you avoid any mix-ups, we’ve put together this guide on understanding company accounts and your company tax return. So, let’s dive in!

What are company accounts?

Company accounts offer an insight into your finances over a 12 month period. They provide a snapshot of how your business is doing, which can be beneficial for stakeholders, investors and banks.

Keeping accurate company accounts is important, so here’s a breakdown of what you’ll need to include.

1. Balance sheet

The balance sheet is like a list of your belongings. It shows everything your company owns, owes and is owed in one financial year.

Here’s are some examples:

Assets (what your company owns)

• Cash in the bank
• Inventory or products your company has made or bought to sell
• Property and equipment like buildings, computers and vehicles
• Investments, stocks or bonds your company has purchased 
• Any money that customers owe you

Liabilities (what your company owes)

• Debt and overdrafts
• Interest
• Wages
• Taxes
• Rent
• Utilities
• Any money you owe suppliers for goods or services bought on credit

Equity (your stake in the company)

This is a summary of what’s left once you subtract liabilities from assets. This is recorded underneath liabilities on your balance sheet.

2. Profit and loss account (or income statement)

Your company accounts should also include a profit and loss statement. This outlines your revenue, costs and expenses over the financial year. 

Basically, it helps to show whether you’re making a profit or facing a loss.

It breaks down the different sources of income, like sales of products or services, and details any expenses, like salaries, rent, and utility bills. This should help you understand how your business is performing, and where you might need to make any changes!

3. Cash flow statement

The cash flow statement is another financial report that shows all the cash coming in and going out of your business.

It’s important as it helps you see if your business has enough money to pay its bills and keep things running smoothly. 

By tracking cash flow, you can ensure that your company has the resources needed to cover expenses and continue operating without any hiccups.

4. Director’s report

You might need to file a director’s report as part of your company accounts, but you don’t need to worry about this if you’re a micro-entity.

Where do I send my company accounts?

You’ll need to send copies of your accounts to:

• All shareholders
• Anyone who can go to the company’s general meetings
• Companies House
• HMRC as part of your company tax return

What’s a company tax return?

So, that leads us nicely to the company tax return.

A company tax return is a document you (or your accountant) send to HMRC that shows your company’s taxable profits. It also shows how much Corporation Tax you need to pay. 

The key difference here is that it focuses on your tax responsibilities, rather than overall finances like company accounts.

A company tax return typically includes:

• A CT600 form (this is for corporation tax)
• Your company accounts for the financial year 
• Your company computations (this is the information which explains the figures you include in your return)
• Any supplementary documents

Getting your company tax return right is important. This makes sure you pay the right amount of Corporation Tax and avoid any potential penalties from HMRC.

So, what can we conclude about company accounts and a company tax return?

Understanding the difference between company accounts and a company tax return is important. While company accounts offer an insight into your financial performance, the company tax return focuses on calculating your tax liabilities.