New small business accounting rules

Earlier this month BIS announced that small companies qualifying as micro-entities will have the option of preparing full shareholder accounts that consist of an abridged balance sheet and profit and loss account. They will continue to be able to file only the balance sheet element report Harris & Co chartered accountants Northampton, the specialist small business and small company accountants.

These changes are effective for periods ended on or after 30 September 2013.

It is normal at this stage to include a link to the corresponding legislation. Unfortunately at the time of writing there is no UK legislation.

The legislation will derive from article 36 of the new EC Accounting Directive. The words are likely to be similar, but not quite the same. The intention is to transpose the "Micros-exemption" in UK law, with the exception of options that would have meant partial accrual, prepayment, accrued and deferred income recognition and presentation.

A micro entity is defined as a company that satisfies two of the three following criteria:

Balance sheet total not more than:	£316,000
Net turnover not more than:	£632,000
Average number of employees not more than:	10

BIS has stated that companies within an exempt group and also charities will not be eligible to apply micro-entity exemptions.

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