“Q: I’m hearing rumours that small businesses and micro entities may soon have to submit profit and loss (P&L) reports along with their annual accounts. Is this true?”
At present, UK small businesses do not have to submit or publicly publish their profit and loss statement (P&L). But what exactly is a P&L? And what changes are coming?
Your P&L report is a financial statement that summarises your business’s revenues, costs and expenses over a specific period. In essence, it shows whether you made money or lost money.
But the rules are being amended. Having the sensitive financial information in your P&L available in the public domain will be a major change for some smaller enterprises.
“A: Yes, the government has recently reaffirmed that small businesses and micro entities will need to submit P&Ls from 2028 onwards”
Under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act 2023), the government is reforming how companies report information and what information they report when filing their annual accounts with Companies House.
Reforms to the way accounts are submitted will include
- Requiring small companies and micro entities to file profit and loss accounts with Companies House as other companies do (but with the option to opt out of publishing this information on the public register).
- Requiring all companies to file their annual accounts via commercial software.
- Removing the option for companies to file abridged accounts.
- A strengthened eligibility statement for all companies claiming an audit exemption.
- Requiring component parts of the filed accounts and reports to all be filed together.
- Reducing the number of times a company can shorten its accounting reference period.
2028 may seem a long way off. But for your small business or micro entity to comply with these new mandatory reporting rules, some changes to your accounting process may be needed.
If you’re not already using commercial cloud accounting software, you’ll need to make that switch for all your financial management and reporting.
Come and talk to our team about getting ready for mandatory P&L filings.
