First statutory accounts for a new company

Q: What period do the first accounts cover?

Three sections of the Companies Act 2006 fix the period. Section 391(4) sets the accounting reference date of a company incorporated under the 2006 Act as the last day of the month in which the anniversary of its incorporation falls. Section 391(5) says the first accounting reference period runs from the date of incorporation to the accounting reference date, and must be more than six months but not more than 18 months. Section 390(2) says the first financial year begins with the first day of that period and ends with its last day, or on another date up to seven days before or after it, as the directors decide. Illustration only. A company incorporated on 10 March 2026 has an accounting reference date of 31 March. Its first accounts run from 10 March 2026 to 31 March 2027, a period of 12 months and 22 days. Section 394 requires the directors to prepare accounts for each financial year, so these are the first accounts due. The period starts on incorporation, not on the first sale. A company that spent its first five months setting up still reports those months, and costs incurred before trade began go through the first profit and loss account. Their tax treatment is covered in pre trading expenses.

Q: What usually appears in a first balance sheet?

A few items are typical of new companies. Share capital. Shares issued on incorporation appear in capital and reserves. If the subscribers have not yet paid for them, the formats provide an asset line, "called up share capital not paid", at item A of the balance sheet formats. Directors' loans. Founders often pay set up costs personally, creating a balance owed to the director. Formation and share issue costs. Paragraph 3(2) of Schedule 1 prevents preliminary expenses, and expenses of and commission on any issue of shares or debentures, from being treated as assets. They cannot be carried forward on the balance sheet. Retained earnings. The opening balance is nil, so the closing reserve is simply the first period's result less any dividends.

Q: What mistakes come up with first accounts?

Starting the period on the first trading day. The statutory period starts on incorporation. Using the tax period as the accounts period. A 12 month Corporation Tax period does not shorten the Companies Act period; the second short tax period still needs a return. Capitalising formation costs. Schedule 1 does not allow it. Showing a nil comparative column. There is no prior period, so a column of zeros labelled as one is misleading. Present the current period only. Missing the shorter deadline after shortening. If the first period is shortened, the filing deadline is recalculated under section 442(4) and can come sooner than expected. Solar Protect provides tax investigation insurance for businesses and fee protection schemes for accountancy practices. Read how our cover works or get a quote.

A new company’s first statutory accounts run from the day of incorporation to its first accounting reference date, which by default is the last day of the month in which the first anniversary of incorporation falls, so the period is usually a little over 12 months. Because there is no earlier period, the accounts have no comparative figures. Otherwise they follow the same framework, formats and approval rules as any later year.

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What period do the first accounts cover?

Three sections of the Companies Act 2006 fix the period.

Section 391(4) sets the accounting reference date of a company incorporated under the 2006 Act as the last day of the month in which the anniversary of its incorporation falls.
Section 391(5) says the first accounting reference period runs from the date of incorporation to the accounting reference date, and must be more than six months but not more than 18 months.
Section 390(2) says the first financial year begins with the first day of that period and ends with its last day, or on another date up to seven days before or after it, as the directors decide.

Illustration only. A company incorporated on 10 March 2026 has an accounting reference date of 31 March. Its first accounts run from 10 March 2026 to 31 March 2027, a period of 12 months and 22 days. Section 394 requires the directors to prepare accounts for each financial year, so these are the first accounts due.

The period starts on incorporation, not on the first sale. A company that spent its first five months setting up still reports those months, and costs incurred before trade began go through the first profit and loss account. Their tax treatment is covered in pre trading expenses.

Can the directors change the first year end?

Yes. Section 392 lets a company give notice to Companies House of a new accounting reference date for the current or previous period, either shortening it or extending it. An extension cannot take a period beyond 18 months, which for a new company means the first period cannot run longer than 18 months from incorporation. A notice extending a period is ineffective if given less than five years after the end of an earlier period that was extended, subject to exceptions for group alignment, administration and Secretary of State directions. A notice for a previous period cannot be given once its filing deadline has passed.

Common reasons to change the first year end include aligning with a parent or the tax year, or avoiding a year end in the busiest trading month. Shortening the first period brings the first accounts forward; see accounting periods and periods of account for how the different period concepts interact.

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Why are there no comparative figures?

Comparatives exist to show the previous period. FRS 102 paragraph 3.14 requires comparative information in respect of the preceding period for all amounts presented, and paragraph 7 of Schedule 1 to the accounts Regulations requires the corresponding amount for the immediately preceding financial year for each balance sheet and profit and loss item. A company’s first accounts have no preceding period, so there is nothing to show.

This has a knock on effect in year two. The second accounts will compare a 12 month year with a first period that may be over a year long. The headings should make the length of each period clear, for example “Year ended 31 March 2028” alongside “Period from 10 March 2026 to 31 March 2027”. If the year end is later changed, FRS 102 paragraph 3.10 requires disclosure that the period is longer or shorter than a year, the reason, and that the comparative amounts are not entirely comparable.

Which size regime and framework apply?

Section 382(1) says a company qualifies as small in its first financial year if it meets the qualifying conditions in that year. There is no two year rule to wait for. For financial years beginning on or after 6 April 2025 the conditions are two or more of turnover not more than £15 million, balance sheet total not more than £7.5 million, and not more than 50 employees. Under section 382(4), where the financial year is not in fact a year, the turnover limit is adjusted proportionately, so a 13 month first period has a slightly higher turnover limit and a short first period a lower one.

A small company can apply the small entities regime in FRS 102 Section 1A, and a micro entity can instead use FRS 105, the standard for the micro entities regime. The choice is explained in FRS 105 vs Section 1A. A company that has not traded at all may be able to file dormant accounts; see dormant company accounts.

What usually appears in a first balance sheet?

A few items are typical of new companies.

Share capital. Shares issued on incorporation appear in capital and reserves. If the subscribers have not yet paid for them, the formats provide an asset line, “called up share capital not paid”, at item A of the balance sheet formats.
Directors’ loans. Founders often pay set up costs personally, creating a balance owed to the director.
Formation and share issue costs. Paragraph 3(2) of Schedule 1 prevents preliminary expenses, and expenses of and commission on any issue of shares or debentures, from being treated as assets. They cannot be carried forward on the balance sheet.
Retained earnings. The opening balance is nil, so the closing reserve is simply the first period’s result less any dividends.

How does the first period fit with Corporation Tax?

A Corporation Tax accounting period cannot be longer than 12 months. Under section 9 of the Corporation Tax Act 2009 a UK resident company’s first accounting period begins when it comes within the charge to Corporation Tax, which, if nothing else brings it within the charge, is when it starts to carry on business. Section 10 ends an accounting period at the earliest of several events, including 12 months from its start and the company’s accounting date.

So the accounts period and the tax period often differ in the first year. GOV.UK confirms that where accounts cover more than 12 months the company must file two Company Tax Returns. The steps are covered in the first Corporation Tax return after incorporation.

When are the first accounts due and who signs them?

Section 442(3) sets a special deadline where the first accounting reference period is more than 12 months: for a private company, nine months from the first anniversary of incorporation or three months after the end of the period, whichever is later. GOV.UK describes this as 21 months after the date of registration. The calculation, with examples, is in the first accounts deadline.

Section 414 requires the accounts to be approved by the board and signed on the balance sheet by a director. Accounts prepared under the small companies regime must carry a statement to that effect, in a prominent position above the signature. See approving and signing company accounts.

What mistakes come up with first accounts?

Starting the period on the first trading day. The statutory period starts on incorporation.
Using the tax period as the accounts period. A 12 month Corporation Tax period does not shorten the Companies Act period; the second short tax period still needs a return.
Capitalising formation costs. Schedule 1 does not allow it.
Showing a nil comparative column. There is no prior period, so a column of zeros labelled as one is misleading. Present the current period only.
Missing the shorter deadline after shortening. If the first period is shortened, the filing deadline is recalculated under section 442(4) and can come sooner than expected.

Solar Protect provides tax investigation insurance for businesses and fee protection schemes for accountancy practices. Read how our cover works or get a quote.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.