Business Accounts

Running head: BUSINESS ACCOUNTS
Business Accounts
Name of the Student
Name of the University
Authors Note
Course ID

1BUSINESS ACCOUNTS
Introduction:
Prior to moving to legal requirements relating to business accounts for big and small
companies it is necessary to determine the actual size of the business. According to Gordon
(2016) it is necessary to determine the size of business so that it can be differentiated from
one another, particularly at the time of dealing with the business accounts. The size of a
business can be better classified in terms of revenue, number of workforce and net assets. As
per Keay 2018) the sales revenue of the small business should not be greater than £10.2
million with number not more than 50. The large businesses simultaneously can exceed the
figures of medium size firms.
Discussion:
According to Salim and Leonard (2019) if the business is eligible as small business
and falls within the realms of sole trader, the legal anticipation remains in how small business
manages its accounts that are different from large business. The legal requirements of small
business includes paying taxes but they are not legally required to make a comprehensive
income statement at the end of accounting year. However, the owner of small business are
required to fill the self-assessment form and sending the same to HMRC for assessment
purpose. The small business are mandated by the law to pay tax on income for any profits
made by business and obligated by law to keep record of all the accounting income and
expenditure.
Small business are mandatorily required to obtain VAT registration for producing
sales revenue of more than £85,000. The law implies that business must charge VAT on all
the goods and services sold by them and submit the VAT to HMRC. “Section 1A of FRS
102” inspires small business to make comprehensive income statement and retained earnings
in order to provide true and fair view (Hummel and Roetzel 2018). The new regulations of