Sunday, April 14, 2024

How to do year-end accounts for a limited company

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.

Sam Allcock
Sam Allcockhttps://www.abcmoney.co.uk
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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