It's your company's year end... so what now?
Posted on 14th May 2020
What exactly is a company’s 'year end'? No, it’s not always December 31st, although this isn’t entirely uncommon. A year end for a limited company is simply the day the accounting period ends for the company. At this point, it also means it is the date that your company needs to start gathering every document necessary to send to HMRC and Companies House.
If you have not yet set up your company, you may be glad to know that the date your choose for your accounting year-end is entirely up to you, but there are a handful of factors you may want to consider. The choice of date for your accounting year-end is entirely up to you as a business owner, but, since you will need to compile a slew of documents, it’s advisable to try to choose a slow time of year for your company’s year end date - if you can!
What is included in a company's year end accounts?
When submitting your corporation tax return, you should submit your year-end accounts to HMRC at the same time. Additionally, there are other detailed records you need to submit to Companies House as well.
The legal documents you need to file include the following:
Balance Sheet: this is the detailed sheet of your company’s assets and liabilities
Profit and loss (P&L): a summary of income and expenses during your accounting period
Directors’ report: a document written by the company directors in which the business performance is detailed, with the director’s perspectives of the company’s current position
Explanatory notes: any necessary commentary or explanation concerning the P&L account and balance
The following documents are ones that you will need to spend time putting detail into, and for that reason, you may want to enlist an accountant (hopefully us!) to ensure that you are making the most of your company and detailing each aspect correctly. Putting these documents together will take hours, even if you do use an accountant, so it is advisable to make use of one to help you out.
Records for income and expenditure: similar to a profit and loss breakdown, these records are more detailed and include receipts of all sales and purchases, bank statements and any outstanding debtors. If the debtors are assumed to be unable to be paid, mark them as a bad debt and write them off. Finally, all your creditors should also be listed.
Floating assets: this includes uncompleted work and unsold stock.
Fixed assets register: these are the physical assets that your business owns including (but not limited to) equipment, vehicles and buildings.
Company liabilities: this includes debts and investments alike. Long-term liabilities include any debts or investments that extend beyond the year end period. Financial liabilities include convertible bonds and notes payable, while operating liabilities include lease obligations or retirement benefits for employees.
Payroll information: use a standard expenses claim form for any employee expenses, and ensure that all calculated for PAYE and NI are correct for your staff payroll.
How to prepare your company year end accounts
Keep in mind when you are preparing for your year end that the higher your expenses are, the less tax, within reason, that you will pay. This means that you should make sure to include any expenses related to your business that you can potentially claim.
Before you send off any documents, these are the steps you will need to take for your company year end accounts:
Analyse your company expenditures. If you are looking to make the most of your year end expenses, consider things like repairing or updating equipment, hosting a scheduled annual employee event or stocking up on supplies that your office requires throughout the year.
Review any bonuses and salaries.
Check your insurance cover.
Invest in a company pension. If you are interested in using a pension plan, make sure all payments are made and received by the pension company prior to end of year.
Pay your corporation tax. During part of the year, consider having the payment that will go towards your corporate tax in a high-interest company bank account.
If all the above sounds a little too overwhelming, we can arrange your company year-end accounts for you. Feel free to give us a call or drop us an email. We’ll be more than happy to help!
Nicola J Sorrell -
Founder | Xero Champion | IR35 Expert
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