The following legislation is main components of law in the UK to govern a limited company:-

1) Micro-entity accounts

There are 3 size classifications of company to consider when preparing your accounts; small, medium or large. Within the small company classification there is a sub-set called a micro-entity, which is applicable to very small companies. There are thresholds for turnover, balance sheet total (meaning the total of the fixed and current assets) and the average number of employees, which determine whether your company is a micro-entity, small or medium-sized.

Any companies that do not meet the criteria for micro-entities, small or medium are large companies and will have to prepare and submit full accounts.

Micro-entities can prepare and file a balance sheet with a reduced set of information than that required by a small, medium or large company. Additionally, a micro-entity will be able to benefit from the exemptions available to small companies such as exemption from audit and the requirement to file a directors’ report or profit & loss account at Companies House. Micro-entities still need to send accounts to their members as well as filing them at Companies House.

If you think your company qualifies as a micro-entity, you may wish to consult a professional accountant before you prepare micro-entity accounts.

Conditions to qualify as a micro-entity
A micro-entity must meet at least two of the following conditions:

turnover must be not more than £632,000

the balance sheet total must be not more than £316,000

the average number of employees must be not more than 10

2) Small companies

There are 3 size classifications of company to consider when preparing your accounts; small, medium or large. Within the small company classification there is a sub-set called a micro-entity, which is applicable to very small companies. There are thresholds for turnover, balance sheet total (meaning the total of the fixed and current assets) and the average number of employees, which determine whether your company is small or medium-sized. Any companies that do not meet the criteria for micro-entities, small or medium are large companies and will have to prepare and submit full accounts.

A small company can prepare and submit accounts according to special provisions in the Companies Act 2006 and the relevant regulations. This means that they can choose to disclose less information than medium-sized and large companies.

If you think your company qualifies as small, you may wish to consult a professional accountant before you prepare accounts in accordance with the provisions applicable to companies subject to the small companies’ regime.

Conditions to qualify as a small company
For accounting periods beginning on or after 01/01/2016 a small company must meet at least two of the following conditions:

annual turnover must be not more than £10.2 million

the balance sheet total must be not more than £5.1 million

the average number of employees must be not more than 50

For accounting periods beginning before 01/01/2016 the thresholds were:

annual turnover must be not more than £6.5 million

the balance sheet total must be not more than £3.26 million

the average number of employees must be not more than 50

3) Medium-sized company accounts

As with a small company, a medium-sized company is determined by its turnover, balance sheet total (meaning the total of the assets) and average number of employees. A medium-sized company can prepare accounts according to special provisions applicable to medium-sized companies. It can also choose to submit reduced information to Companies House.

If you think the company might qualify as medium-sized, you should consider consulting a professional accountant before you prepare accounts.

Conditions to qualify as a medium-sized company
To be a medium-sized company, you must meet at least two of the following conditions:

annual turnover must be no more than £36 million

the balance sheet total must be no more than £18 million

the average number of employees must be no more than 250.

4) Dormant company accounts

All limited companies, whether they trade or not, must deliver accounts to Companies House. However, a company is dormant if it has had no ‘significant accounting transactions’ during the accounting period. A significant accounting transaction is one which the company should enter in its accounting records. Dormant companies may claim exemption from audit in accordance with section 480 of the Companies Act 2006.

When determining whether a company is dormant you can disregard the following transactions:

payment for shares taken by subscribers to the memorandum of association

fees paid to the Registrar of Companies for a change of company name, the reregistration of a company and filing confirmation statements or annual returns

payment of a civil penalty for late filing of accounts