Determining Company Sizes

Introduction

• There are four sizes of company to consider when preparing and filing accounts and reports in accordance with the Companies Act 2006 (CA 2006):
  • micro-entity,
  • small,
  • medium,
  • large.
• The Company size is determined by factors that are set out in CA 2006.
• Certain types of companies are excluded from using certain classification.
  • e.g. Public Companies must use the Large company regime.

Quantitative Factors

• There are 3 classifications of company size to consider when preparing your accounts – micro-entity, small, medium or large:
  • turnover
  • balance sheet total (meaning the total of the fixed and current assets)
  • the average number of employees

Micro-Entity

• A micro-entity must meet at least 2 of the following conditions:
  • turnover must be not more than £632,000
  • the balance sheet total must be not more than £316,000
  • the average number of employees must be not more than 10

Small

• For accounting periods beginning on or after 1 January 2016, a small company must meet at least 2 of the following conditions:
  • annual turnover must be not more than £10.2 million
  • the balance sheet total must be not more than £5.1 million
  • the average number of employees must be not more than 50
• For accounting periods beginning before 1 January 2016 the thresholds were:
  • annual turnover must be not more than £6.5 million
  • the balance sheet total must be not more than £3.26 million
  • the average number of employees must be not more than 50

Medium

• To be a medium-sized company, you must meet at least 2 of the following conditions:
  • the annual turnover must be no more than £36 million
  • the balance sheet total must be no more than £18 million
  • the average number of employees must be no more than 250

Large

• Companies that do not meet the above criteria must apply the Large Company regime.
• In addtion, certain types of companies automatically fall in the large company definition:
  • a public company
  • a company that has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity or that carries on an insurance market activity
  • a member of an ineligible group