Year-End Accounting Checklist for Limited Companies
What is a year end for limited companies?
Before you delve into the year-end accounting checklist, it’s important to understand what the year end actually refers to.
For limited companies, the year end (which is also known as the ARD or accounting reference date) is the completion of an accounting period. It does not necessarily correlate with the calendar or fiscal year, but rather is usually set according to when the company was incorporated.
For example, if a company began on 26th October, their year-end date would be the 31st October and their financial year will run from 1st November to 31st October.
Year-end accounting checklist
Prepare your expenses
The first step in the accounting checklist is to get your expenses in order. If you make sure to claim everything that you can, you will reduce your overall company profit figure, meaning that you will pay less Corporation Tax.
The main rule when it comes to expenses is “wholly and exclusively”, meaning that an expense can only be claimed if it is solely for business use.
Chase up unpaid invoices
Unpaid invoices can provide a skewed figure at your company year end. It’s important that all of your accounts are as accurate and up-to-date as possible, so the year end is a key time to round up your debts owed. Tracking invoices is much easier with dedicated accounting software.
Make a note of important deadlines
The deadline for filing your Company Tax Return (CT600) with HMRC is typically 12 months after the end of the accounting period it covers. However, it’s best to submit it as early as possible as you’ll have to pay a penalty if you miss the deadline.
Although the deadline for filing your tax return is 12 months after the year end, the deadline for paying your Corporation Tax (or telling HMRC that you don’t owe any) is 9 months and 1 day after your year end.
The deadline for Companies House is slightly different, and it’s important that you file your annual accounts before the deadline to avoid a fine. If it’s your first account filed with Companies House, this will be due 21 months after the day you register with them. For your regular annual accounts, these will be due 9 months after your company’s year end.
File the relevant documents with HMRC
The next step in your year-end accounting checklist is to actually file the following documents with HMRC:
Company Tax Return
HMRC will issue a “notice to deliver a tax return” shortly after your year end. The Company Tax Return (CT600) is filed online with HMRC and contains details of your company’s income, minus allowable expenses and tax allowances. HMRC use your profit to calculate the Corporation Tax you must pay.
Statutory accounts - also referred to as annual accounts - are prepared from your company’s financial records at the year end.
The accounts must include:
- A profit and loss account.
- A balance sheet - this shows everything the company owns, owes and is owed at the year end. It must have the name of the director printed on it and be signed by the director.
- Footnotes on the accounts (information about the transactions between your company and its directors).
- A director’s report.
File the relevant documents with Companies House
Your statutory accounts must also be submitted to Companies House and most companies can submit these together when filing with HMRC. If you are a small company or micro-entity, you may be able to send ‘abridged’ accounts to Companies House. This will contain a simplified balance sheet with footnotes, and you can choose whether or not to send the director’s report and profit and loss account.
We know that company directors can feel extremely overwhelmed at the year end, especially when you’re trying to focus on running your business day-to-day. However, hopefully this year-end accounting checklist has provided you with the necessary information!