How do companies file for accounting compliance and what records should be kept?

Full Explanation

Startups must file annual financial statements with Companies House (or equivalent), maintain monthly P&L, balance sheet, cash flow records, and prepare tax filings for HMRC.

In the UK, private companies file abbreviated financial statements (Companies House) but must maintain full financial records (profit & loss, balance sheet, cash flow). Timelines: annual returns due 9 months after year-end. Key records to maintain: monthly P&L (all revenue and expenses), quarterly balance sheet (assets, liabilities, equity), monthly cash flow (actual cash in/out), invoice log (all revenues, to prove auditor/tax reviewer), expense receipts (every purchase, for deductibility), and bank reconciliations (monthly). Tax filing requires: Corporation Tax return (due 12 months after year-end), VAT return (quarterly if VAT-registered), and potentially PAYE/RTI if you have employees. For startups pre-revenue, minimal filing is required but good records are essential: even pre-revenue companies need to track expense receipts (many are deductible against future income). Use accounting software (Xero, FreeAgent, Wave) to track records automatically — manual spreadsheets are error-prone and audit-hostile. Many startups underinvest in accounting and later face HMRC scrutiny or investor due diligence problems. Best practice: hire a bookkeeper (£500-£1000/month) to maintain records; hire an accountant (£1500-£3000/year) to prepare annual filings.

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