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What check to carry out for Company year end accounts for limited companies ?

Updated: Feb 26, 2021

What is company year end ?

The company year end is the date your company financial year ends. It is usually 12 months period. However, you are allowed to increase or decrease company year end.

Why Company year end is important and what are the deadlines ?

Company year end is the time to close the books. This data need to be reported to company house and HMRC. Company accounts are due for filling with in 9 months of the year end and corporation tax is due for filing with in 12 months.

As a result of the COVID-19 emergency, HMRC announced that from 27th June, companies will have an extension to their statutory accounts filing deadline. The filing deadline is extended if it falls between 27th June 2020 and 5th April 2021 (including these dates). The companies has 12 months to file the accounts instead of 9 months.

What will happen if I miss the deadlines ?

HMRC and company house charge penalties if you file the documents late to company house and HMRC.

HMRC penalties for corporation tax filing late

These penalties increase with time, if you are late for one day there is a £100 charge and if you late for further three months you will get £100.00 top up.

If you late more than 6 months, HMRC estimate your corporation tax and add 10% penalty to it. It does not stop there another 10% is added if you are 12 months late.

Late filling penalties by company house

Company house charge £150.00 penalty for one month late filing

one to three months £375.00

three to six months £750.00

Over 6 months £1500.00

What documents should I prepare for year end accounts filing ?

Before you start preparing year end accounts, you have to do the groundwork. I will try to list as many documents list as possible but however every business is different there may be more documents require according to your company type. Your Accountant will help you guide through this process.

  • Customer invoices

When you make a sale, you raise an invoice. Your invoice would have invoice number, date and customer names.

Please make sure all your invoices are filled in order. You can chose invoice number sequence for filing or alphabetical order using customer first name. Some companies chose to file by date order but it is recommended to use invoice number sequence for filing as you would have many customers and it will be hard to find an invoice efficiently.

  • Supplier invoices

Similar to customer invoices when you buy from a supplier, they will also issue an invoice to you. recommended method for supplier filing is using alphabetical order unless you use purchase order system.

  • Purchase order

Purchase order is a document raised internally and send over to a seller from a customer which indicate agreed price, purchase order number, quantities and products. It is used to control the purchasing of products from external suppliers. It is usually used by medium to big size businesses. You can use the purchase order number to file the supplier invoices, delivery notes.

  • Debtors and Overdue Invoices

Overdue invoices are the invoices due over the agreed terms. It is good idea to collect all the customer overdue invoices and chase up the debts, It will help you reconcile the debtors with the outstanding invoices. Providing accurate debts information for balance sheet current assets reporting

  • Creditors & Accruals

Similarly, Make a list of any supplier invoices which are not paid but are due. It will help you to provide the creditors list at the year end.

Accruals are services or good received by company but you have not actually received the invoice. This will help you to see the actual profit or loss you have made during the year. For example you have sold the goods of £10,000 and counted as a income but have not accounted for the purchase of the goods for £4000. Accruals will help you to account for £4000 which will help you to see the actual profit.

  • Customer Receipts

Receipts are the proof you have received the money for the service or goods delivered. It is good to have all receipt numbered. Mainly businesses use receipt books for cash sale or over the tills. It helps to reconcile the actual money received and sales made.

  • Expenses

Similar to supplier invoices, expenses are documents which provide evidence you have spend money from your company accounts. Try to get all the expenses while you are incurring them during the year instead of leaving it for the year end. As it becomes very time consuming process if you are dealing with all the expenses at the year end. Remember every business expense you claim for will reduce your profit and you will pay less corporation tax on it.

  • Bank statements

Bank statements confirms what you have spent during the year and what you have earned and balance as at year end. It is important to arrange your bank statements on regular basis. If you are small business, you can mark these statements transactions with supplier and customer invoice numbers. It will make sure you all the transactions are genuine.

  • Any contract paperwork

Some companies have contract which are longer than a year. In majority of cases some money is received or paid in advance. Having contract paper arranged will help the accountants to allocate the right amount in the right financial year it belongs too.

  • Loan agreements

Some of the loan need to be disclosed in year end accounts notes. It is also require to show short term and long term creditors in the balance sheet.

  • Inventory Count

If you would have inventory stock, It will be important to carry out inventory count a day before the year end or day after the year end. You can use the inventory checklist templates available online or just use excel to record them.

As it is not always possible to carry out these check on the same day as the sales may be taking place on the same time. It is recommended to keep records of the sale on the day or purchased or delivery arriving on the day. Your ltd Company accountant will be able to add or deduct it according to movement in inventory from the count carry on.

This will help you to have an accurate picture of your accounts.

  • Payroll details

Payroll is the biggest expense for most of the limited company. It is import to reconcile payroll. Collect P32, Payment summary part1, part 2, and HMRC employer payment summary from HMRC portal.

  • Pension statements

Most of companies fall under the auto enrolment legislation. Print out statement of pension payment from pension provider portal and also extract the payroll report from your payroll software.

  • VAT Returns

If you are VAT register, you need to getter VAT return filed confirmation for all four quarters if you file quarterly. VAT reconciliation reports and any adjustment made.

Do I have to provide any details after the Year End dates ?

Once you have gathered all the documents for the year end process, It would be good idea to get list of debtors payments received after the company year end date and put in excel or word document, date of payment received, customer name and invoice it relates too.

Similar process should be preformed where you have paid for suppliers invoices and expenses. It will help you or your limited company Accountant to verify all the debts are recoverable and all the creditors are up to date.

It would also be important to look into invoices issued after financial year end date to make sure they do not relate to the previous year. Bank statement should also be checked to make sure you have not missed any other receipt or expenses which may relate to year ended.

What else do I have to think about ?

Accounts are prepared on going concern basis unless your are planning to close the company. Accountants will be asking about your plans for next 12 months to check you have plans to keep trading in the following year.

You may have to present your budget for next 12 months and cash flow forecast. These are usually prepared by Management Accountants . If are small business then It is more likely you will be providing this info by yourself. Gather any contract documents you have which will confirm sales will take place after the year end.

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