Reduced obligations for smaller businesses.
WHAT THE CONCEPT IS
Legislation defines a category of small company with lighter requirements.
WHAT THE CRITERIA TYPICALLY RELATE TO
Turnover below a threshold Net assets below a threshold Members all being individuals No foreign or government membership Directors holding a defined proportion of shares
WHY ALL CRITERIA MATTER
Failing any one removes the classification.
WHAT EXEMPTIONS MAY FOLLOW
Relief from certain audit requirements Simplified filings Reduced meeting formalities
WHAT TAX RELIEF MAY APPLY SEPARATELY
Reduced or nil company income tax rates for small companies, under finance legislation.
WHY THAT IS A DIFFERENT TEST
Company law and tax law use their own definitions and thresholds.
WHAT TO ESTABLISH
Your position under each, separately.
WHAT CHANGES WHEN YOU GROW
The exemptions cease, and obligations increase.
WHAT THAT MEANS PRACTICALLY
Audit becomes required, with its cost and timeline.
WHAT TO PLAN
The transition, before the threshold is crossed.
WHY BEFORE
Engaging an auditor after year end is difficult.
WHAT TO MONITOR
Turnover and assets against the thresholds.
WHAT TO DOCUMENT
Your classification, annually.
WHAT TO VERIFY
Current thresholds, which change.
WHAT TO ASK YOUR ACCOUNTANT
Which category you fall into, this year.
