Preparing for your financial year end
Whether you carefully track everything all year round, or sort it all with two weeks to go, preparing for your financial year end is important for every business. If you’re about to get things in order for your business, we’ve put together a short guide to help your year end go as smoothly as possible.
What is a year end?
A ‘year end’ is the term used to describe the accounting documents you need to complete at the end of your financial year. What you need to submit depends on your business, but for a limited company you’ll at least need to file a corporate tax return to HMRC, and abbreviated accounts to Companies House.
Your year end accounts are publicly available, and will be checked by potential partners or investors you want to work with, or by lenders if you want to get a loan.
- Corporate Tax Return – details the income you’ve received and any expenses or tax allowances. It’s important to get these figures right, as the remaining profit will be used to decide how much corporation tax you need to pay.
- Abbreviated accounts – gives a broad view of your company’s finances, including your profit and loss, cash held, assets, creditors and debtors.
Key steps to get ready
Before you can file your accounts, you’ll need to do a lot of work to get all the information and documents you need. Here are a few key steps you can take to make sure the process goes as smoothly as possible.
Chase unpaid invoices
You want your books to be as accurate as possible, so you need to know exactly what you have and what’s missing. Chase down any outstanding invoices, then check the final amount matches with your records. If there’s any discrepancies you should investigate these before submitting your accounts.
Count your stock
If you have stock this should be handled in a similar way. Complete a full inventory of all your stock and log if there’s any discrepancies with your records. If there’s stock missing you can try to chase it down, or count it as a loss if it can’t be traced.
Get your expenses in order
Collecting expenses and receipts from all your staff is a crucial and often time consuming job. Business expenses are deducted from your profits which means you’ll have less tax to pay, so it’s worth putting the time in.
HMRC defines an expense as something ‘wholly and exclusively’ for business use. They can often be small amounts like lunch or transport, but can add up and make a difference over the year.
There’s a host of apps available to help track expenses and accounting. Read more in our Top Business Apps blog.
Check your employee data
Double check all your employee data is accurate. You as the employer are liable for any mistakes in income tax or national insurance contributions, not the employee. So to avoid having to ask your employees for some of their wages back later on, make sure it’s all up to date.
File your paperwork
Accounts need records to back them up, so make sure all your paperwork is organised and filed so that you can access them easily. This could be either hard copies or online. If you don’t have a record of something, this is the time to get statements from your bank, or statements of account from suppliers. Get everything in order before filing your year end, so if HMRC ask questions you’ll have evidence at the ready.
Work together to get prepared
Don’t leave it up to one person to chase down everything. Everyone in the business should be helping get the documents you need, whether it’s receipts for expenses, supplier contracts, or missing invoices. Get the word out early so that everything is submitted in plenty of time. Then whoever manages your accounts can bring it all together.