There are three accounting reports that every limited company owner should review on a regular basis: the balance sheet, the profit and loss (P&L) statement, and the cash flow statement.
Balance Sheet
A balance sheet is a snapshot of a limited company’s financial position at the end of a month, quarter, or year. It shows what the company owns, what it owes, and the owner’s equity in the business.
To maintain a healthy balance sheet, a limited company needs to manage debt carefully to avoid carrying excessive liabilities, track the value of its assets and depreciate them in line with tax rules, and ensure that the owner’s investment generates a sufficient return over time.
P&L Statement
The P&L statement summarises a limited company’s financial activity over a given period usually prepared monthly covering revenue earned, company expenses, and the resulting net profit or loss.
Strong companies generate consistent profits for their owners. Owners should also keep a close eye on gross margin, which is the difference between the price at which an item or service is sold and the cost of producing it. Competitive pressure that forces prices down, combined with rising costs, can seriously erode gross margins, so it is important to monitor these trends as they emerge.
Cash Flow Statement
The cash flow statement records all cash movements over a given period again, usually prepared monthly including cash from operations, investment, and financing activities. Cash flow is vital to a company’s continued operations.
A business may be generating sales, but if it is not collecting accounts receivable on time, it can run out of cash and cease to function despite being profitable on paper.
What Records Are Needed for These Reports?
To prepare these three accounting reports, a limited company must maintain bookkeeping records covering the following:
- Income
- Expenses
- Accounts receivable
- Accounts payable
- Payroll
- Inventory
- Assets
- Legal records
- Tax documents
Tips for Limited Company Owners
It is essential to keep on top of corporation tax filing deadlines. From 1 April 2026, increased penalties apply: the late filing penalty is £200, rising to £400 for filings more than three months late, with further increases for repeated late filings.
U&W’s management accounts service prepares all three of the reports covered in this article monthly, quarterly, and annual including Profit & Loss, Balance Sheet, and Cash Flow statements.
How to Calculate Corporation Tax
For a step-by-step walkthrough of how to calculate corporation tax for a limited company, refer to our dedicated guide. You can also consult our tax tables for current corporation tax rates, or use our corporation tax calculator to estimate your company’s liability instantly.
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