Keeping financial affairs in good order
Primary Eyecare Companies ensure that their financial affairs are in good order and all financial duties are discharged in a correct and timely manner. As optical business owners in many cases, PEC Financial Leads are well versed in financial matters.
Primary Eyecare companies must produce accounts and have these filed annually.
LOCSU can arrange for accounts to completed annually using Menzies, who offer a preferential rate for Primary Eyecare Companies. Statutory accounts must meet either:
- International Financial Reporting Standards
- New UK Generally Accepted Accounting Practice
The company’s annual accounts (‘statutory accounts’) are prepared from its financial records at the end of the company’s financial year. They must include:
- A ‘balance sheet’, which shows the value of everything the company owns, owes and is owed on the last day of the financial year and signed by a director on behalf of the board and the printed name of that director
- A ‘profit and loss account’, which shows the company’s sales, running costs and the profit or loss it has made over the financial year
- Notes about the accounts
- A director’s report signed by a secretary or director (a business review/strategic report is only required if the company does not qualify as small)
This is where the company hasn’t contracted any services for that period and so there’s only a limited number of transactions e.g. loans between LOC and PEC, insurance payment in anticipation of beginning to contract. In this instance, LOCSU can assist with preparing and filing accounts.
Companies must always send copies of the statutory accounts to:
- Member (LOCSU)
- People who can go to the company’s general meetings
- Companies House
- HM Revenue and Customs (HMRC) as part of the Company Tax Return
Submission of accounts to Companies House
As a limited company, annual accounts need to be filed with Companies House. The deadline is 9 months after the company’s financial year ends and a penalty is payable if it misses the deadline.
Primary Eyecare Companies fall into the small company category (total assets of under £5.1m, turnover of under £10.2m, fewer than 50 employees) so only have to register a summarised balance sheet and notes at Companies House:
- Profit and loss account is not required
- Balance sheet must have the name of a director printed on it and must be signed by a director
- Company’s accounts don’t need to be audited
The company is called ‘dormant’ by Companies House if it has had no ‘significant’ transactions in the financial year that it would normally report. Significant transactions don’t include:
- Filing fees paid to Companies House
- Penalties for late filing of accounts
- Money paid for shares when the company was incorporated
In this event, accounts will be filed as dormant.
Financial record keeping
Accounting records much be kept together with other financial records, information and calculations needed to prepare and file annual accounts and Company Tax Return. This includes records of:
- All money spent by the company, for example receipts, petty cash books, orders and delivery notes
- All money received by the company, for example invoices, contracts and sales books
- All PAYE records
- Details of assets owned by the company
- Debts the company owes or is owed
- All services bought and sold
- Whom the company bought and sold them to and from
- Details of all contracts
- Any other relevant documents, for example bank statements and correspondence
Accounting records must be kept for six years from the end of the last company financial year they relate to, or longer if:
- They show a transaction that covers more than one of the company’s accounting periods
- The company has bought something that it expects to last more than six years, like equipment or machinery
- The Company Tax Return is late
- HMRC has started a started a compliance check into the Company Tax Return
Company Tax Return and Corporation tax
The company must file a Company Tax Return if it gets a ‘notice to deliver a Company Tax Return’ from HM Revenue and Customs (HMRC). This is often done by the accountant that has been engaged.
When companies file their tax returns, they need to work out:
- Profit or loss for Corporation Tax (this is difference from the profit or loss shown in the annual accounts)
- Corporation Tax bill
A company tax return must still be filed and HMRC notified if there is nothing to pay.
Active Primary Eyecare companies also have to file Corporation Tax returns. Companies have nine months plus one day after the financial year end to pay any corporation tax owing.