Definition of a medium sized company for accounting purposes

Clifford McDowell

Definition of a Medium-Sized Company for Accounting Purposes

You need to know the definition of a medium-sized company when it comes to accounting and filing documents with Companies House. There are three size classifications for registered companies, Small, Medium, and Large (Any company exceeding the criteria set for Medium is classified as Large). Also, the small company category has a further sub-classification reserved for tiny organisations, these are labelled as ‘micro-entity‘.

What is a Medium-Sized Company?

To fit the Companies House definition of medium-sized company the company must meet at least two of the following criteria:

  • Annual turnover amount must be under £36 million
  • Average number of employees must be less than 250 people
  • Balance sheet total cannot exceed £18 million

However, certain financial service companies and public companies can’t qualify as medium-sized companies regardless of size, these are required to adhere to their own regulatory requirements as applied by Companies House. Companies that are part of a larger group are also excluded if this group includes entities which are financial service companies or public companies.

What Kind of Company is Excluded from the Medium-sized Class?

The following companies are excluded from the medium-sized classification:

  • A public company
  • A body corporate trading shares on a regulated market
  • An individual permitted to carry on a regulated activity under Part 4 of the Financial Services and Markets Act of 2000
  • A small company that is either a banking company, an authorised insurance company, a MiFID (Markets in Financial Instruments Directive) investment firm, an e-money issuer or a UCITS management company (Undertakings for Collective Investment in Transferable Securities)
  • A person who carries out insurance market activities

What Medium-Sized Company Accounts – The Requirements

There are a few things that a medium-sized company accounts should include, and they are:

  • A balance sheet showing the director’s printed name and signature
  • A profit and loss account
  • Group accounts
  • Notes attached to the accounts if appropriate

A medium-sized company should include the following along with the above-listed items:

  • Auditor’s report. This report should have the registered auditor’s name included unless the company claims an exemption from the audit.
  • Director’s report. This report should include a strategic report or a business review that clearly shows the printed name of the director or approving secretary.

What a Medium-Sized Company Must Delivery to Companies House

  • Profit and loss account – can be abbreviated (has to be full if the company prepares IAS accounts)
  • Full and complete balance sheet that shows the director’s signature and printed name
  • Special report from a registered auditor, showing the registered auditor’s printed name
  • Director’s report that shows the printed name of the director or approving secretary
  • Notes attached to the accounts

The special auditor’s report should also contain a few things. First, it should have the auditor’s opinion that states that the auditor believes that the company is entitled to deliver the abbreviated accounts to stay in accordance with section 445(3) of the Companies Act of 2006. Also, the report should state that the company has properly prepared the abbreviated accounts in accordance with the Secretary of State’s regulations.

A medium-sized company is also required to deliver a balance sheet and a directors’ report if this is deemed appropriate. These reports have to contain a statement that clearly says that the company has prepared all of the accounts in accordance with the special provisions of section 445(3) Companies act of 2006 in regard to medium-sized companies.

In summary, the Definition of a Small Company is:

  • Annual turnover amount must be less than £36 million
  • Average number of employees must be under 250 people
  • Balance sheet total cannot exceed £18 million

Medium-Sized Companies in DoordaBiz:

Doorda holds extensive data on more 12 Million organisations which allows you to easily identify medium companies and add more information. This includes our Regulator Data so you can check to see if the company has been fined or issued a warning, you will also have access to all listed directors and registered charges via DoordaBiz.

You can also garner intelligence on addresses linked to a company via DoordaProperty including business rates and inspection reports. All this data and more is linked to the company number so you can effortlessly see the structure, movements, and activities of a company on many levels.

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