If you plan to quit your job and start a business or, as a newbie, start your career as a limited company owner, you must register your company in the United Kingdom. Running a business comes with a corporate tax imposed on the profits earned by a company in the financial year. If you need guidance for corporate tax and company accounts, then this article describes it all. Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help with company tax returns vs company accounts. What are Company Accounts vs Company Tax Returns? To a new businessman, company accounts and company tax returns might seem similar, but both these terms are different and serve different purposes in the accounting and management field. Company tax returns A company tax return is the amount of tax paid by the limited company to HMRC at the end of its accounting period during a financial year. A company tax return is known as a corporation tax in the UK. This amount encompasses tax matters based on profit earnings only. Filing a company tax return usually includes: A CT600 form to be filled while filing a tax return Accounts owned by the limited company Any related documentation to be associated with the company tax return A company tax return must be filed before the date announced by the HMRC. If a company is late in a company tax return, the HMRC issues it with a “notice to deliver a company tax return”. The duration of returning corporate tax is 12 months, which is set by the HMRC. How Do You File a Company Tax Return? Before filing a company tax return, you should have all the required information about your: Profit and loss for corporate tax return Corporation tax bill For filing corporate tax returns, a limited company can hire an accountant or file its taxes online with a company house in the UK. Taxable Profits of Up to £1.5 Million Companies in the UK are liable to file a company tax return if they have a yearly profit of £1.5 million. This amount should be paid within the financial year at the end of the financial year. An accounting period is defined by the company, and it may have two accounting periods in the first year of its inception. There are two criteria if your taxable profits are more than £1.5 million. If your taxable profits are between £1.5 million and £20 million If you run a large company and are making annual profits of more than £1.5 million, then you should pay your corporation tax online in the form of instalments. However, there are certain exceptions for large companies. Large companies don’t need to pay their tax in instalments if, in the company accounting period, the amount of profit liable for tax return is less than £10,000. During the company’s accounting period, total profits don’t exceed £10 million, such that it’s the first accounting period of the company or it did not make much profit before. The annual profit rate of the company is not more than £1.5 million, or the annual profit earnings are less than £10,000 for a company accounting period ending in the last 12 months. If your taxable profits are more than £20 million In contrast to small limited companies, a very large company is making huge annual profits of more than £20 million in its accounting period. Like small companies, large companies are also liable to pay the due company tax online in the form of instalments. According to the UK government website, for accounting periods starting after 1st April 2023, the threshold value for corporate tax for large companies is reduced if several companies are associated with a large company. A company is in association with another company if: One company is controlled by the other Both companies are controlled by the same authority Control is described as ownership of share capital or having more voting power. The Company Accounts A company account refers to the financial records of a business or a limited company, which include the assets owned by the company, liabilities, revenues generated, and the cash flow of the company. All the records are arranged into accounts, which are then classified as assets, liabilities, expenses, income, or profit. Types of Company Accounts Below are the types of company accounts: 1- Balance sheets A balance sheet is a complete list of a company’s belongings. This sheet shows how much cash is in the company bank account and lists inventory products, property, and equipment like buildings, vehicles, and machinery owned by the company. A balance sheet also shows the investment made by the company, stocks or shares available in the share market, and any amount of money that is due by the client. 2- Liabilities Liabilities are the amounts that the company must pay. Liabilities include debts and overdue on the company account, interest to be paid by the company, wages of employees, taxes to be paid, rent of the company office, vehicle or land rented by the company, utility bills, and any amount to be paid on the purchase of goods or services. 3- Equity Equity refers to the assets, capital shares, or stocks left in the owner’s name after deducting all liabilities from assets. The equity is listed under the liabilities section of the balance sheet. 4- Profit or loss account The company account also has a profit and loss account. The profit and loss highlight the revenue generated, costs, and expenses during a financial year by the company. This company account gives you an idea of how the current business strategies are leading to profit or loss. The company’s profit and loss account includes expenses like salaries of employees, rent, bills, etc. 5- Cash flow statement The cash flow statement is a company account highlighting the cash flow of your business. The cash flow statement is important to have an idea of the cash you …

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