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It’s essential to keep track of your finances when you run a business. There are accounts that you must produce as a legal requirement, as well as others which are useful for management.

What are statutory accounts?

It’s compulsory for limited companies to produce statutory account reports every year. These provide an overview of overall spending, rather than a breakdown of specific expenses and costs.

Amongst other documents, statutory accounts typically include a profit and loss report. They can also include a balance sheet referencing things like credit, asset value, and capital gains.

Although statutory accounts are useful to evaluate progress and forecasts, they are mainly for HMRC. You might also need to provide them to company shareholders.

What are management accounts?

It’s not compulsory to produce management account statements, so they’re usually only seen by people within the business. Because they provide useful information about the business, they’re typically useful as a guide when making crucial decisions.

Management accounts give insight into the financial position of the company, concentrating on specific areas.

There’s no specific deadline for producing them, though generally it’s useful to review them regularly for strategic decision making.

 

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What is the difference between statutory and management accounts?

Statutory accounts Management accounts
You have to provide these to HMRC You don’t have to produce these, though they’re very useful.
Useful as an overview of financial activity. Tend to focus on specific areas of the business.
For external use. For internal use.
Generally only created annually. You can produce these as frequently as you need.

Get help with your finance and accounting from our team of experts by calling 020 3355 4047 or ask for a quote.

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.

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