How to do year-end accounts for a limited company

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A company Year End is the end of your business’s accounting period. The best way to find out the actual year end for your limited company is by looking it up on your company record at Companies House. Year end accounts is simply a summary of your limited company’s overall performance for an accounting year, which Fusion Accountants can help you prepare.

Year end accounts is a legal (and often daunting) requirement for limited companies to prepare and file your accounts and tax returns. Many business owners worry about the consequences of getting it wrong and the impact it can have.

It was reported that businesses in London were reported to be the top offenders for filing year end accounts late, with over 220,000 UK companies facing hefty fines for missing the Companies House deadline.

Year end accounts can seem overly complex, particularly if you are in your early years of trading, or have just shifted status from sole trader to limited company

This needn’t be a complicated process, and, in this article, we take a look at the basics of year end tax accounts and what your limited company needs to do.

End of year reporting

Every limited company has its own financial year. This year always starts on the anniversary of the official start-date of the company. This is specified as when your company was registered with Companies House. So, the financial year ends the day before the anniversary of the company start-date. This shouldn’t be confused with the tax year, which runs from 6th April to the 5th April.

If this is your company’s first accounting period it may mean you have to submit a few months more than your 12-month year-end-accounts. In this case, you’ll need to submit an additional tax return to cover the extra trading time.

Producing these accounts gives the business owner valuable information about how their business is faring. It can help you understand day-to-day operational costs, and all the other key costs of your business finances.

What need to be filed with the HMRC?

Company Tax Return

You need to send your Company Tax Return (form CT600) to HMRC.  This contains details of your turnover, expenses, tax allowances, profit, and other information. This is done in the form of the company’s Statutory Accounts.

HMRC will use this information to calculate your corporation tax liability. If you have an accountant, it’s likely they will have calculated this figure for you before the forms are submitted.

Annual Accounts (or Statutory Accounts)

A limited company’s Statutory Accounts or Annual Accounts are the documents that are required to be sent to Companies House. These are the documents that will outline and explain a company’s financial performance throughout the year for both the HMRC and the company’s shareholders.

Statutory Accounts are a summary rather than an extensive record. Rather than individual transactions they will instead contain overall income and outgoing figures for the company for the accounting period. 

Statutory Accounts are made up of the following:

  • Income Statement – the company’s profit and loss for the accounting period.
  • Statement of Financial Position – this is the overall value of a company and is otherwise known as the Balance Sheet. This reports the assets and liabilities, and the total of the difference between them as they stand at the end of the accounting period.
  • Directors Report – unless a company is a micro-entity, it will need to produce a Directors Report. This is an annual report on the state of the company by the board of the directors.
  • Footnotes – any extra information that helps to clarify what’s contained in the earlier sections.

The Statement of Financial Position and the Footnotes will be published by Companies House. This will be available for general viewing and can be accessed on the Companies House website.

Keep track of company accounts filing deadlines

It’s important to keep track of the deadlines for filing accounts to the two different authorities. Limited companies need to submit their year-end accounts to HMRC and Companies House.

Companies House

  • Submit your first accounts – 21 months after your company’s registration date.
  • File subsequent annual accounts – 9 months after the end of your company’s financial year.

HMRC

  • Pay corporation tax or inform them the company doesn’t owe any – 9 months and 1 day after the end of your accounting period.
  • File your company tax return – 12 months after the end of your accounting period.

The deadline for paying any corporation tax is shorter than the one for submitting your Company Tax Return. If you have an accountant, they will be able to calculate how much is owed. Overpayments can be corrected later.  It’s good practice to submit your tax return well before the deadline to ensure that you pay the right amount of tax.

Penalties for missing a deadline

If you miss the deadline for submitting the required documents to either Companies House or the HMRC you may be liable for paying a penalty.  In some cases, your company will be struck off from Companies House register and you will be fined, if you don’t send your accounts and/or Confirmation Statement when due.

If you’re late in filing your documents an automatic penalty notice will be issued.

The late filing penalties issued by Companies House are:

  • Up to 1 month – £150
  • 1–3 months – £375
  • 3-6 months – £750
  • Over 6 months – £1,500
  • Over two years in a row – penalties will be doubled

What should I do to get ready for my Limited Company Year End?

When filing your limited company accounts, a good accountant can help you understand what you need, or you can plough through the detailed guidelines on the gov.uk website.

Working with an accountant will make the process of preparing year end accounts less stressful and the best part is that you will be eliminating the possibility of making costly mistakes, while potentially saving your time and money.

Before you prepare for your Company’s Year End Accounts, there are a few steps you need to take care of:

  • Prepare – you and your team should ensure you have all the necessary information at hand to be able to complete the documentation and submit on time.
  • Chase overdue payments – to ensure your accounts are as accurate as they can be it’s time to chase down those unpaid invoices.
  • Sort-out your expenses – expenses reduce your Corporation Tax liability so it’s important to ensure that all allowable expenses are recorded.
  • Make sure your figures match – all the figures in your accounts should tally with the figures in your supporting documents. These include receipts, invoices, and bank accounts. Make sure that any unpaid invoices are listed as outstanding debts, rather than revenue.
  • Ensure your staff payroll data is up to date – make sure that your staff employment data such as payroll, benefits and expenses are completely up-to-date and have taken account of staff comings and goings during the financial year.

Get professional help from an accountant

The easiest way to remove the stress and headaches of filing your Limited Company end of year accounts, is to get professional help.

If you don’t have the resources or the time to manage this complex task it makes sense to seek the advice of a specialist accountancy firm who can provide a variety of key services to make the filing process easier. 

If you need expert assistance with year-end accounts, contact One Click Accountant today. Accountants offer bespoke assistance you can opt for support that’s tailored to your company’s exact requirements.

Mistakes while filing Limited Company accounts can be costly. Getting tailored professional support can ultimately save you a great deal of stress, time and money.

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