A Comprehensive Guide to Accounting for a Limited Company

Team Nomi

May 21, 2025
4 minutes read

Whether you’re just starting or have been running your company for years, getting your accounting right is important. Accounting for limited companies is not just about balancing the books, it’s about staying compliant, making smart business decisions, and planning for growth.

In this blog, we’ll break down everything you need to know, from statutory obligations to tax-saving tips. Let’s make limited company accounting less confusing and a lot more manageable.

Understanding Financial Statements for Limited Companies

For any limited company, maintaining accurate financial records is not just good practice, it’s a legal requirement. The three core financial statements for your company’s financial reporting and provide important insights into your business’s performance. Let’s see one by one in detail.

The Balance Sheet

The balance sheet provides a clear picture of your company’s financial position at a specific point in time. Balance sheets include:

• • A financial health check shows if assets cover liabilities.
  • Creditworthiness is examined for loan applications.
  • Investor insight demonstrates company stability.

The Profit and Loss Account

The profit and loss statement summarises revenues, costs, and expenses over a period (monthly, quarterly, or annually), ultimately showing whether your company made a profit or loss. This profit and loss account includes: 

• • Performance measurement, which tracks profitability trends.
  • Tax calculation, form basis for corporation tax.
  • Decision-making which identifies cost-saving opportunities..

The Cash Flow Statement

Many profitable businesses and limited companies fail due to poor cash flow management. This statement tracks actual cash movements. Cash flow statements include Liquidity management, Growth planning and Investor confidence.

Preparing Annual Accounts

All limited companies must prepare and file annual accounts with both Companies House and HMRC. This critical process ensures compliance with legal requirements while providing a clear picture of your company’s financial health. Here’s a detailed breakdown of how to prepare your annual accounts efficiently:

Gather Financial Records

Maintain organised records of:

• • Invoices & receipts
  • Bank statements
  • Expense claims

Draft Statutory Accounts

Statutory Includes:

• • Balance Sheet
  • Profit & Loss Account
  • Cash Flow Statement 
  • Director’s Report & Notes

File Annual Accounts with Companies House

• Deadline: 9 months after your company’s financial year ends.
• Late filing penalties: £150–£1,500, depending on delay.

Confirmation Statement

A Confirmation Statement (previously known as the Annual Return) is a mandatory filing that all limited companies must submit to Companies House at least once every 12 months.

It does not contain financial information but confirms that your company’s registered details are up to date, including:

• Company name & registered office address.
• Director(s) and shareholder(s) details.
• Standard Industrial Classification (SIC) code

Tax Returns for Limited Companies

All limited companies must file various tax returns to remain compliant with HMRC. Understanding these requirements is crucial to avoid penalties and optimise your tax position. Here’s a detailed breakdown:

Corporation Tax Return (CT600)

Every limited company must file an annual Corporation Tax return (CT600) to report its taxable profits. The current Corporation Tax rates follow a system in which companies with profits under £50,000 pay 19%, while those with profits exceeding £250,000 pay 25%. For profits between £50,000-£250,000, marginal relief applies to gradually increase the effective tax rate.

Filing deadline:

• • 12 months after your accounting period ends.
  • Payment is due 9 months and 1 day after the period ends.

VAT Returns

VAT registration becomes mandatory when a company’s taxable turnover exceeds £90,000, though voluntary registration is permitted below this level. Registered businesses typically complete VAT returns quarterly, with payment due within 1 month and 7 days after each period ends. 

The standard VAT rate remains 20%, though some goods and services qualify for reduced 5% or zero rates.

Managing accounting for your limited company doesn’t have to be overwhelming when you understand the essentials, from preparing accurate financial statements (Balance Sheet, Profit & Loss, and Cash Flow) to meeting important filing deadlines for annual accounts and confirmation statements. 

Remember, staying proactive with your finances not only avoids penalties but also empowers smarter decision-making for sustainable growth, and if you ever need expert guidance, professional accounting services are available to smooth the process so you can focus on growing your business.

Using Nomi’s accounting software for limited companies and good accounting records management makes the process simple. Experience the benefits with a 30-day free trial to explore its features and functionalities.

Note: All the information provided is based on available resources. For accurate, personalised, or up-to-date details, consult a qualified accountant or accounting professional.