How to Read a UK Company's Annual Accounts on Companies House

UK limited company accounts are publicly filed at Companies House and viewable for free by anyone. For small companies (turnover under approximately £10.2 million, balance sheet under £5.1 million, fewer than 50 employees), the accounts filed at Companies House are abbreviated — typically just a balance sheet and notes, without the full profit and loss. Micro-entity companies (turnover under £632,000, balance sheet under £316,000) file an even simpler micro-entity balance sheet. The full accounts (including profit and loss) are sent to shareholders but only the abbreviated version is public.

The balance sheet is the core of a small company's public filing. It shows, at the company's year-end: fixed assets (property, equipment, investments), current assets (debtors — money owed to the company, cash at bank, stock), current liabilities (creditors due within one year — trade creditors, VAT owed, PAYE), and net assets (total assets minus total liabilities, which equals the total equity — shareholders' funds). The size of the retained profit reserve in shareholders' funds reveals cumulative profits never distributed — a large undistributed reserve is a sign the company is profitable but the director hasn't paid themselves (perhaps to defer tax, perhaps due to neglect).

What debtors and creditors tell you. If a company's debtors (money owed to it) are very large relative to turnover, it may have collection problems. If creditors are very large relative to the balance sheet, the company may be using suppliers as informal financing — stretching payment terms. For a potential supplier or client, these are early warning signs worth checking before committing to a large contract.

The audit and dormancy status. Most small companies state in their accounts that they are exempt from audit (turnover under £10.2m, no public interest) — this is normal. Dormant company accounts show a balance sheet with only share capital and any retained loss or profit — no trading activity. If a company you're about to deal with filed dormant accounts when you expected trading accounts, that is worth querying.

For your own company: your accountant prepares the full accounts (with profit and loss) for you to approve and HMRC to tax. The abbreviated version goes to Companies House. Checking what is publicly visible about your own company annually takes five minutes at beta.companieshouse.gov.uk and is a good habit — it shows what any bank, client, or investor sees when they look you up.