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

Full Explanation

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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