By Mark Rowland Accountancy resources Say goodbye to abbreviated accounts 26 Jul 2017 For 2016/17 accounting periods, abbreviated accounts for small businesses are out. So what are your options? It’s been almost two years since the Financial Reporting Standards for Smaller Entities changed in line with The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015. But there is still some confusion about the new requirements. The most significant changes for small companies include new thresholds for qualifying as a small company, changes to the disclosures required in small company accounts, amended accounts formats and different filing obligations. In this article, we’ll focus mainly on the replacement of abbreviated accounts. Previously, small businesses had to produce two sets of statutory accounts: the abbreviated accounts, filed at Companies House, and the full report for shareholders. No longer. For accounting periods that start on or after 1 January 2016, small businesses only need one set of accounts, and they have some options: abridged accounts, full accounts, ‘filleted’ accounts or micro-entity accounts. Before we look at them, it’s worth outlining what is classified as a small company under the new regime. The threshold for the number of employees is the same – no more than 50 – but small companies are now defined as having a turnover of not more than £10.2m (previously £6.5m), and/or a balance sheet of not more than £5.1m (previously £3.26m). Companies only need to meet two out of the three criteria to qualify as ‘small’. The accounts menu Abridged accounts act as both the public accounts and the shareholder accounts for small businesses. Companies need to obtain permission from their shareholders to file abridged accounts at the time of preparation. An abridged balance sheet only needs to include line items preceded by letters (for example, fixed assets) and Roman numerals (debtors), not those preceded by Arabic numbers (other receivables). The abridged profit and loss account combines certain items under one heading: ‘gross profit and loss’. For example, an abridged profit and loss account may include turnover, cost of sales, other operating income and gross profit or loss. Companies can choose to abridge both the balance sheet and profit and loss account, or opt to abridge just one of them. Companies that meet two of these three criteria can qualify as a micro-entity: an annual turnover of £632,000 or less; a balance sheet total of £316,000 or less; and 10 employees or fewer. Those companies can file microentity accounts, which only need to include a balance sheet, with a small number of notes. Small and micro companies have the option to omit the profit and loss or the director’s report. This is known as a filleted account. This isn’t a new option, but the requirements have been revised. If a small company decides to file filleted accounts, the balance sheet must disclose that the company has chosen not to include its profit and loss or director’s report, and contain a statement that the accounts have been delivered in accordance with the small companies regime. Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.