5 things most businesses don’t realise about their startup’s reporting requirements

The admin side of running a startup isn’t glamorous, but get it wrong and the consequences can be very real. Robert Engeham, Founder of Your Company Formations shares what catches founders off guard.

With around 800,000 new businesses incorporated each year in the UK, startups aren’t slowing down. Many start their business with meticulous attention to the product, the pitch, and the people, and then months down the line receive a letter from HMRC that blindsides them. The reporting and filing obligations that come with incorporating a company in the UK are often misunderstood, mismanaged, or simply never explained properly in the first place. And it can spell problems to startups if they don’t get it right from the get go.

The good news? None of this is complicated once you know what you’re dealing with.

As someone who has helped millions of business owners in the UK start and scale their businesses, here are five things the majority of new business owners simply don’t realise about their reporting requirements, and what to do about them.

1. Your Annual Return and Annual Accounts are not the same

What some founders don’t realise is that there are actually two distinct bodies they need to report to: Companies House and HMRC, and neither accepts the other’s paperwork.

Companies House requires what’s called an annual return (also known as a confirmation statement), which is a document confirming that your company’s details, including registered office, directors, and shareholders, are accurate and up to date. HMRC, meanwhile, wants your annual accounts plus a Company Tax Return, which includes your profit and loss account, balance sheet, directors’ report, and potentially an auditors’ report.

These go to different places, at different times, and serve different purposes. Conflating the two is one of the most common mistakes new directors make..

2. Your ARD date matters

When you register your company, Companies House assigns you an accounting reference date (ARD). This isn’t something you choose; it defaults to the last day of the month in which your company was incorporated. So if you registered on the 15th of February, your ARD will be the 28th of February the following year.

This date matters because it dictates your financial year end and determines the deadlines for everything else. Your annual accounts are due no later than nine months after your ARD. Your corporation tax is due nine months and one day after the end of your accounting period. Your Company Tax Return must be filed within twelve months of the period end.

Founders who don’t know their ARD often find themselves scrambling when deadlines appear.

3. Even dormant companies have obligations

Many founders incorporate a company, perhaps to secure a name or in preparation for a launch that then gets delayed, and assume that because they’re not trading, they don’t need to do anything. This is a costly misconception.

If your company is dormant, you must notify the Corporation Tax department at HMRC. While you won’t owe any corporation tax until the company becomes active, you’re still required to file an annual return with Companies House each year. Dormant does not mean invisible. Companies House still needs to hear from you!

The moment the company does begin trading, you have three months from the start of any business-related activity to register as active with HMRC. Miss that window and you risk penalties and a complicated catch-up process.

4. Small companies get a shortcut, but only if they qualify

One detail that trips up founders who do their research is the question of what, exactly, needs to go into their annual accounts. The full statutory accounts required by HMRC, which include a profit and loss account, balance sheet, directors’ report, notes to the accounts, and potentially an auditors’ report, can sound intimidating. And for many startups, that level of reporting is more than is actually required.

See Also

How framing changes the way consumers perceive your offer

Small companies that qualify for an exemption are permitted to file abbreviated accounts made up primarily of a balance sheet and accompanying notes. Whether you qualify depends on factors including turnover, total assets, and the number of employees. It’s worth understanding your eligibility early, both because it reduces your reporting burden and because it affects the kind of accountant support you’ll need.

If you’re unsure whether your company qualifies, speak to an accountant before you file, not after.

5. There’s a free reminder system, and most founders never use it

Companies House operates a free eReminder service that sends you email alerts ahead of your key filing deadlines. You can register up to four email addresses, meaning you can set it up so that your accountant, your co-founder, your finance lead, and yourself all receive reminders for the same dates.

You sign up through WebFiling on the Companies House website, selecting ‘Join eReminders’ during the process. It takes minutes and could save you from a missed deadline that results in an automatic penalty, which starts at £150 for late accounts and increases the longer they’re overdue.

Reporting requirements aren’t the most exciting part of building a startup. But they are a non-negotiable part of running one legally and well. The founders who build good habits early, knowing their ARD, understanding the difference between their Companies House and HMRC obligations, and setting up reminders before deadlines loom, are the ones who avoid the panicked calls to accountants and the unnecessary fines that eat into early-stage cash flow.

Get the foundations right, and you can focus your energy where it actually belongs, launching and growing a successful startup!