Companies which qualify as either small or medium sized can often obtain exemptions in the type and format of their annual statutory accounts
The exemptions can relate to both their main accounts provided to their shareholders and those which are delivered to Companies House which are available for public inspection.
Small companies are classified as those which have gross assets of less than 3.26 Million (£2.8 million prior to 6 April 2008). Gross assets are defined as the total of the balance sheet assets before the deduction of any liabilities.
The turnover limit for a small company is currently £6.5 million (previously £5.6 million) during the year in question; the mean number of people employed by it must not exceed fifty.
To be classed as small, the company must qualify on any two of the above three tests in a given accounting period.
Medium Sized Companies
The criteria for medium sized companies are that the total for both fixed and current assets must not be in excess of £12.9 million (£11.4 million applicable before 6 April 2008), turnover less than £25.9 million (£22.8 million) and no more than two hundred and fifty staff.
Again, a company can qualify as medium if the meets any two of these criteria.
Consequences of Being Small or Medium Sized
In situations where a company meets the criteria necessary to be classed as either small or medium sized in a particular year, it automatically qualifies for that same status in the next year.
This is irrespective of whether the company is still sufficiently small or medium sized to meet the current requirements in isolation.
In certain scenarios consideration might be given as to whether to prepare and submit full statutory accounts even if the company is entitled to deliver abbreviated financial statements. Where for example, a company is applying for loans or other funding they might decide to forego the available exemptions so as to render for complete information about its financial position and standing.