How do you prepare accounts for the year-end accounting period?
Many business owners find preparing their year-end accounts a headache. It brings the threat of late fees, so there is no choice but to have your annual accounts prepared on time for both HMRC and Companies House.
When we talk about year-end accounts, we are referring to the data you must submit at the end of your company’s accounting period. For limited companies, this is the end of the financial period, when you file your statutory accounts with HMRC and Companies House.
To prepare for filing your annual accounts, you need to do the following:
- File your company tax return (CT600) with HMRC
- File your annual accounts with both HMRC and Companies House
Companies are often advised to align their accounting period with the financial year, which ends on 31 March. This would make 31 December the deadline for corporation taxes. However, you can decide to keep your year-end period at any period of your choice.
With the help of an accounting firm, using advanced digital accounting software, this can all be taken out of your hands.
Can I do my own end of year accounts?
You can choose to handle your year-end accounts for your limited company by yourself. This means completing and submitting your own business tax return along with your annual accounts. However, most businesses choose to appoint a qualified accountant to do this on their behalf.
Accountants are experts in business finance, able to proficiently navigate a company’s structure and obligations. Trying to do it all yourself leaves you vulnerable to making mistakes, and this can lead to severe penalties. The process is also very time-consuming, and your time is better spent on managing and growing your business.
With the help of a professional accountant with accounting practice, you can rest assured your year-end accounts and company tax return are submitted with full legal compliance and on time.
How long after year-end should accounts be filed?
The deadline for your company tax return is 12 months after the end of the accounting period. If you miss this deadline or for any other criminal offence, you will be required to pay a penalty along with some explanatory notes.
There is a separate deadline for paying your Corporation Tax bill. This deadline is usually nine months and one day after the end of your accounting period.
Companies House must receive your annual accounts no more than nine months after your year-end. If it’s your first return, you have up to 21 months after your registration date to submit the end accounts. In some cases, you may be able to apply for an extension, but this must be done before the filing deadline.
Both HMRC and Companies House charge late filing penalties to encourage companies to file everything promptly to maintain accounting standards. The penalties increase with time, so the longer you leave it to file your year-end accounts, the more it will cost you.
What do accountants need for the year-end Accounts?
At WIS Accountants, we send our clients a checklist of just a couple of company information to remind them to be prepared for year-end. We will ask for the following documents:
- Records of income
- Bank statements
- Details of payments made by cheque
- Invoices and receipts for purchases
- Changes to your assets (bought or sold)
This list is not comprehensive, but it gives an idea of what accountants need as you approach the filing deadline. It will also be helpful to give any other information you have that relates to your company accounts. Bear in mind that documents and information must be sent in advance to allow sufficient time to do the work of preparing the accounts so your limited company meets its requirements and doesn’t miss out on any potential savings.
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Year-end accounting for limited companies made simple
Preparing the year-end reporting that a business owner need for the end of the financial year can be stressful as income records, expenses gather, assessment tax return, sales invoices, unpaid tax, national insurance, all the necessary paperwork, all the necessary figures from the previous statement, all your accounts of the past year, all the paperwork company owns will have to be gathered, but it doesn’t have to be as stressful as you think.
With WIS Accountancy, you can take advantage of both our premium accountancy service and our bookkeeping team to stay on top of your financial position throughout the financial year.
The experts in our teams will handle all the financial admin for your limited company, meaning all you need to do is keep sending us evidence of transactions as they happen. With us in your corner, you won’t need to worry about your statutory accounts, tax return, corporation tax payments, tax allowances, year-end reporting or any other responsibilities through the financial year. Everything will be done for you, with robust reporting and analysis to keep you ahead of the game.
The reality is that year-end accounting needs to be accurate and timely, and it is not simple to achieve this yourself. Errors could lead to you paying more or less corporation tax than you should, both of which could cause serious problems. No limited company should be leaving their tax return to chance, and WIS Accountancy can do it all for you.
Your company year-end accounts explained
Business accounts are full of numbers, and if you don’t understand the story those numbers are telling, you are not well-positioned to handle your financial reporting.
The Balance Sheet is a statement that provides insight into your business assets, liabilities and shareholder equity at a given point in time. It indicates your company’s financial health, dealing with fixed and current assets and current/long-term liabilities.
With the info from the Balance Sheet, you then want to calculate your company’s short-term viability by working out the liquidity ratio. Divide the current assets by current liabilities and, if the number is below 1, you may be in trouble. Your Net Asset Value (NAV) is also important.
The Profit and Loss Statement is another key indicator, accurately recording performance over a set period of time. This will allow you to calculate your gross profit by subtracting the cost of sales for turnover within the set period.
You must also consider the following:
- Depreciation and amortisation
- The Cash Flow Statement (operating, investing and financing activities)
If all of that means very little to you, or it sounds complicated, you are not alone. This is why an accountant is the best way to ensure your statutory accounts, tax return, corporation tax and everything else are all handled properly at year-end.
What is a company year-end?
Year-end is sometimes referred to as an accounting reference date. It is the completion of an accounting period, at which time businesses are required to carry out some specific procedures to close their books.
The UK accounting year doesn’t necessarily align with the calendar year. The fiscal year is set by the Government, running from 6 April to 5 April the following year. This is the standard tax year for the UK and typically affects employees and sole traders, but tax return deadlines can vary for different people.
With limited companies, the financial year revolves around the date the company was founded. Companies receive an accounting reference date (ARD), referring to the last day of the month in which the company was incorporated through Companies House. This will be the date of their company year-end, and the new year begins the following day.
In some cases, you can change the date of your year-end.
What needs to be filed with HMRC?
Corporation tax and company tax return.
Limited companies are required to register for, and pay, business taxes to HMRC. These taxes must be paid on all forms of taxable income, and come in the form of Corporation Tax and Value Added Tax (VAT).
If your company is trading, and therefore ‘active’, it must be registered with HMRC within three months of any business activity occurring. You register by creating a Government Gateway account and must provide a number of details about your company.
When you are registered, HMRC requires a Company Tax Return every year, including when your business fails to make a profit. This is done through the form CT600, and you must include full statutory accounts and calculations showing how the eventual figures were worked out.
Based on the information in your Tax Return, you must calculate how much tax you owe. This is done through the preparing of annual accounts, which HMRC provides a template for. This must also be filed with HMRC every year.
What needs to be filed with Companies House?
Companies House requires all registered companies to file company accounts at the end of the accounting period. These show how the company has performed over the financial year. This must be done, regardless of whether you have been profitable or even if you have been a dormant company throughout the year.
The accounts you file with Companies House annually usually consist of the following:
- A profit and loss account
- Balance sheet
- Director’s report
- Financial year notes
The Director’s Report provides information on things like the health of the company’s finances, the performance of the company, its potential to grow and its level of compliance with financial regulations.
Companies House will accept abridged accounts from small businesses. These are a simplified version of the accounts, not requiring a Director’s Report or a profit and loss account.
What should I do to get ready for my Company Year-End?
You should prepare for the end of your company’s tax year with the requirements from both HMRC and Companies House in mind. Check the records in your Sales Ledger and Purchase Ledger and try to chase up unpaid invoices and clear any unpaid bills. You should then gather your business bank statements to ensure the cash in the bank matches your company records.
You must also check the following:
- Accruals and Prepayments
- Capital (assets and depreciation)
If all this sounds daunting, WIS Accountancy can help. With the combination of our bookkeeping and accountancy services, you never need to worry about your domestic and international financial reporting standards, tax implications or late filing penalties at the end of your company’s financial year again.
What else do I need to think about?
In addition to the reporting duties described thus far, you should consider a couple of other reporting duties that can be handled at the same time.
If your company is VAT registered, you could do your VAT returns and company Confirmation Statement. The Confirmation Statement is done to confirm your information with Companies House each year, and it must be filed within 14 days of its due date. The VAT return, meanwhile, is usually due at your financial year-end, so it makes sense to do it at the same time.
Need some help?
It is a lot of work, but company accounts must be precise and up-to-date to handle your financial year-end correctly. WIS Accountancy can help with our bookkeeping and accounting services to keep your company ahead of the game all year round.
Let us handle all this admin so that you can focus on what’s important for growing your company. We offer competitive rates for our accounting packages, and an impeccable service with your needs always at the forefront. If you have any questions, please don’t hesitate to get in touch.