Small Company Limits

small company limits

In 2016 the small company limits were almost doubled. Companies which previously filed medium accounts could now potentially file as a small company. So, what are the small company limits in 2018?

The small company limits 2018

The small company limits have 3 criteria. To qualify as a small company you must satisfy 2 out of the 3 conditions. They are as follows:

  • Turnover under £10.2 million. Prior to 2016 this was £6.5 million.
  • Gross assets under £5.1 million. Prior to 2016 this was £3.26 million.
  • Average number of employees under 50. This did not change as it was under 50 prior to 2016.

The conditions explained:

Turnover is the amount disclosed in the profit and loss account. If the company is vat registered then the amount is exclusive of vat.

Gross assets is the total of fixed assets and current assets as disclosed on the balance sheet. No liabilities are to be included in this total.

Employees is calculated on a monthly basis. Every month add up the number of employees on the payroll. Then sum the total of the monthly amounts and divide by 12. This gives you the average over the year.

Small company limits for 2 years consecutive

To be able to file small company accounts you must meet the above criteria for 2 years in a row.

Therefore if a company was medium sized last year but qualifies as a small company this year and next year. It will still file medium sized accounts this year but next year it will be able to file small company accounts.

If it is the companies first year of filing accounts the 2 year criteria is not applicable.

Small company v medium sized company

Medium sized company accounts contain a lot more disclosures.

Therefore if the company qualifies for the small company limits we would strongly recommend filing small company accounts.

The benefits of filing small company accounts include:

  • Significantly reduced number of disclosure notes in the accounts
  • Can omit the directors report (from Companies House filed accounts)
  • Profit and loss account can be omitted (from Companies House filed accounts)
  • Can prepare abridged accounts which again significantly reduces discloses
  • Don’t need to prepare an audit (other conditions may apply)

Micro company accounts

Companies which qualify as small may also qualify as micro companies.

The rules are very similar to those regarding small company qualification. However the micro company limits are as follows:

  • Turnover under £632,000
  • Gross Assets under £316,000
  • Employees under 10

Even if the company does qualify as micro we suggest this may not always be the best filing option. Our blog micro entity accounts goes through the considerations in more detail.

Medium sized companies

For completeness we have disclosed the medium sized limits below:

  • Turnover under £36 million
  • Gross Assets under £18 million
  • Employees under 250

If 2 out of 3 of these conditions are exceeded then the company must file large company accounts.

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer

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