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The Companies Act 2006 and its associated regulations set out several criteria for a company to qualify as small. To qualify as a small company, at least two of the following conditions must be met.

  • The company’s annual turnover doesn’t exceed £6.5 million
  • The balance sheet total (meaning, the total of the fixed and current assets) doesn’t exceed £3.26 million
  • The company employs no more than 50 personnel

Small companies have less onerous and detailed accounting responsibilities because of their smaller turnover and asset holdings. This stipulation saves smaller companies time, money, and resources when preparing their financial accounts — all of which are at a premium for smaller companies.