What are year-end accounts and how can I prepare for them?
If you’re new to business, year-end accounts may seem like a daunting prospect. But with the right preparation, advice and approach, you will have nothing to worry about.
In this blog, we’re going to look at what year-end accounts are when you need to complete them, and how we like to prepare for the end of the financial year.
What are year-end accounts?
In business, the year-end is defined as the end of a company’s financial year. Year-end accounts, therefore, are a summary of your business activities over a 12-month period.
Depending on the size of your firm, year-end accounts may include a Corporation Tax return, a Directors’ Report (a written document outlining the business’ performance over the year), a Balance Sheet (detailing the company’s assets and liabilities), a Profit and Loss (P&L) statement, and any footnotes.
What are abbreviated year-end accounts?
The smallest of businesses may submit ‘abbreviated year-end accounts’ if they meet at least two of the following:
- has fewer than 50 employees
- turnover is less than £10.2 million; AND/OR
- has less than £5.1 million on their balance sheet.
Abbreviated year-end accounts consist of a single balance sheet, signed by one director.
When is the year-end?
The year-end can span any 12-month period, but it is common to align the financial year with the tax year, which runs from 06 April to 05 April the following year.
How can I prepare for year-end accounts?
Year-end accounts summarise almost all of your business activities, so it’s important to keep organised throughout the year.
This includes keeping track of income and expenditure records, floating assets, fixed assets, company liabilities, payroll information, and more.
To keep data collection simple, we recommend the following:
- Transition to the cloud. Paperwork is cumbersome, easy to lose, and hard to maintain. By working in the cloud, you can save hundreds of hours and avoid unnecessary errors when it comes to completing your year-end accounts.
- Chase up overdue invoices. Your company records should be as accurate as possible to avoid a potential tax investigation.
- Check payroll reports: you are responsible for paying employees at least the National Minimum Wage, as well as employer National Insurance and workplace pension contributions. If you find an error, correct it.
Why do I need to complete year-end accounts?
Year-end accounts are a legal requirement. They must be submitted to HMRC (alongside your Corporation Tax return) within 12 months of the end of your company’s financial year.
Year-end accounts must also be submitted to Companies House within nine months of the end of your financial year.
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Interested in discussing your options with one of our expert team? Get in touch today, we are always happy to help!
