Not every UK limited company needs a statutory audit. Many smaller companies qualify for audit exemption, but it is important to understand the rules, as an audit may still be required in certain situations.

For financial years starting on or after 6 April 2025, a company is generally audit exempt if it qualifies as a small company and meets at least two of the following conditions:

• Annual turnover of no more than £15 million
• Balance sheet total (gross assets) of no more than £7.5 million
• Average number of employees of no more than 50

If a company exceeds these limits, it will not usually lose audit exemption straight away. In most cases, the company must exceed the thresholds for two consecutive financial years before the exemption is lost.

However, some companies must have an audit regardless of size. This includes public companies and certain regulated businesses, such as banks, insurance companies, and some investment firms.

An audit may also be required if the company’s shareholders request one. Shareholders holding at least 10% of any class of shares, or 10% of voting rights, or 10% in number of members, can demand an audit. This request must be made in writing and received at least one month before the end of the financial year.

Charitable companies are subject to different rules and often face lower thresholds for mandatory audits. For example, a charity may require an audit once its gross income exceeds £1 million, depending on its circumstances.

If you are unsure whether your company needs an audit, or whether an audit could be beneficial for lenders, investors, or business planning, please get in touch and we will be happy to review your position.

When a small business applies for a bank loan, the bank is mainly trying to answer one question, “How likely is it that we will be repaid, on time and in full?” To reach that decision, they will review a mix of financial evidence, trading performance and the overall risk profile of the business.

A key factor is affordability. Banks will look at recent accounts, tax returns (where relevant) and up to date management figures to see whether profits and cash flow can comfortably cover the proposed repayments. They will often request bank statements to understand day to day cash movement, whether income is stable and whether the business regularly runs tight on cash or relies heavily on an overdraft.

They will also assess the quality of the borrower. This includes the business credit record, payment history and any missed payments or County Court Judgements. In many cases the personal credit history of the directors or business owners will be reviewed as well, particularly for smaller companies or newer businesses.

Security is another important area. For secured lending the bank will consider what assets are available, such as property, vehicles, equipment or investments and the likely value if sold. For unsecured borrowing, banks may request a personal guarantee, which gives them extra protection if the business cannot repay.

Banks will also look closely at what the loan is for. Funding that supports growth, improves productivity or helps smooth short term cash flow tends to be viewed more positively than borrowing that simply plugs ongoing losses. A clear plan, realistic forecasts and evidence of customer demand can strengthen an application.

Finally, the bank may assess the wider trading outlook, sector risk and how dependent the business is on a small number of clients or suppliers. The stronger and more consistent the business looks, the better the chances of approval.

The Insolvency Service data for England and Wales shows monthly company insolvencies remain high by historical standards, even though they move up and down month to month. For example, November 2025 recorded 1,866 registered company insolvencies, down on October 2025 and also below the same month a year earlier. The wider context matters, monthly totals through 2025 have generally been slightly higher than 2024, but lower than 2023, which saw a 30 year high in annual insolvencies.

New company formations: still strong, but down on the prior year

On the formations side, Companies House figures show incorporation volumes have softened. In the financial year ending 2025, there were 801,864 company incorporations, down 10% compared with the financial year ending 2024. At the same time, dissolutions rose, with 726,735 dissolutions in the financial year ending 2025, up 9.6% on the prior year.

Quarterly data shows how this can translate into net shrinkage in the register for periods of time. Between July and September 2025 there were 215,982 incorporations and 234,373 dissolutions, so dissolutions outpaced incorporations in that quarter.

A practical way to read this is that the “start-up engine” is still running, but not as hot as it was, while the “clean-up” of non-viable businesses has accelerated.

Why both trends can be true at the same time

ONS business demography data helps explain the apparent contradiction. On an enterprise basis (different from Companies House incorporations, but directionally helpful), business births edged up from 316,000 to 317,000 between 2023 and 2024, while business deaths fell from 310,000 to 280,000, producing the lowest death rate since 2016.

So, depending on which lens you use, you can see: (a) high company insolvency activity, (b) lower incorporations than the prior year and (c) relatively resilient enterprise births and improved enterprise death rates. Differences in definitions and timing matter, but the shared message is that the UK is in a reallocation phase: weaker balance sheets and marginal business models are being pushed out, while new ventures keep forming, often leaner, more specialised and sometimes set up to replace old entities.

Making mistakes in business is unavoidable. No matter how experienced or careful someone is, decisions are made with imperfect information, time pressure and changing conditions. What separates resilient businesses from those that struggle is not the absence of mistakes, but the ability to learn from them and adapt.

The first step is recognising mistakes early. Small issues often provide warning signs before they develop into serious problems. A missed deadline, a dissatisfied client, or a project that runs over budget all contain useful information. Ignoring these signals, or explaining them away, usually makes matters worse. Acknowledging what has gone wrong allows corrective action while the impact is still manageable.

Once a mistake is identified, reflection becomes essential. This involves stepping back from the immediate emotional response and focusing on the underlying causes. Was the decision based on incomplete data, unrealistic assumptions, or insufficient resources? In many cases, mistakes reveal weaknesses in systems rather than individual failings. Understanding this distinction helps avoid blame and encourages constructive analysis.

Mistakes often highlight flaws in processes. Repeated pricing errors may point to poor cost tracking or unrealistic margins. Ongoing issues with staff turnover might indicate unclear roles or weak communication rather than performance problems. Reviewing systems after a setback allows businesses to improve controls, refine workflows and reduce the likelihood of repetition.

Another key lesson is adaptability. Markets change, customer expectations evolve and strategies that once worked may no longer be effective. A failed product launch or marketing campaign can reveal valuable insights about customer behaviour that would not have been obvious beforehand. Businesses that treat these outcomes as feedback, rather than failure, are better placed to adjust and move forward.

Sharing lessons learned is also important. When mistakes are discussed openly, others can benefit from the experience without repeating it themselves. This helps create a culture of continuous improvement, where people feel able to raise concerns and suggest improvements.

Over time, learning from mistakes builds resilience and confidence. Each setback that is understood and addressed strengthens future decision making. In business, mistakes are not a sign of incompetence, they are evidence of action. The real risk lies not in making mistakes, but in failing to learn from them.

Cash flow remains one of the most pressing concerns for small businesses, even where trading appears stable. Many businesses are finding that rising costs, cautious lenders and slower customer payments are combining to create ongoing pressure on day to day finances. In our experience, cash flow issues rarely arise from a single event. They tend to build gradually, which is why early visibility and proactive management are so important.

Operating costs have increased across most sectors, and these increases now feel structural rather than temporary. Wages, energy, insurance and supplier costs remain significantly higher than they were only a few years ago. For businesses with limited pricing power or fixed contracts, margins can be squeezed quickly, leaving less room to absorb delays in customer payments or unexpected expenses.

Access to finance has also become more restrictive. Overdrafts and short term lending are more expensive, reviews are more frequent and approval processes can take longer. This makes it harder to rely on borrowing as a flexible buffer when cash inflows are uneven. As a result, businesses need a clearer understanding of their cash position and greater control over the timing of payments in and out.

Late payment continues to be a major contributor to cash flow stress. Even well run businesses can struggle if customers consistently pay late or extend terms without discussion. When receipts are delayed, pressure quickly passes through to VAT, PAYE and Corporation Tax liabilities. What begins as a timing issue can escalate into missed deadlines, penalties or the need for time to pay arrangements with HMRC.

Credit control is another area where small improvements can have a meaningful impact. Prompt invoicing, clear payment terms and consistent follow up should be standard practice. Strong credit control is not about damaging relationships. It is about setting clear expectations and protecting the financial health of the business.

If you are experiencing cash flow pressure, or if you simply want greater confidence in your numbers, we can help. Please contact us to review your cash flow position, explore practical options and put a plan in place before issues become more difficult to manage.