Don’t be left floundering when your company hits the financial year-end. Let us help you through the process so you know exactly what you need to do, and how to best accomplish it.
With April just around the corner, you may well be about to hit your year-end. A bit like Christmas, you know it’s coming, but it never fails to sneak up year after year. Planning is paramount. Having a clearly defined to do list and timetable to carry out the necessary tasks will remove that last-minute panic and minimise your time on the process and the accompanying headaches. Ensure your records are up to date as you progress through the year and that each person involved knows what tasks they will need to perform, and has these built into their workload.
What is Financial Year-End?
It’s likely you are well aware of your financial year-end requirements but let’s clarify matters for those new to dealing with business paperwork. Your company’s financial year-end is the date your accounting period ends. Once hit, you have a limited window to submit mandatory paperwork. It’s also the best time to plan for growth and examine your current situation. Along with Companies House and HMRC, if you’re looking for a loan from lenders or acquiring an investment from potential investors, they will also be keen to see the reports.
What’s Due: Corporate Tax Returns
Maybe the most infamous of the financial year-end documents is the CT600, or Company Tax Return. This will contain the final figures for your company’s income and details any tax allowances or expenses. Your remaining profit will be used to calculate your Corporation Tax liability for the period.
What’s Due: Statutory Accounts
HMRC will also require your statutory accounts. These will need to include your Profit & Loss and Balance Sheet for the period, alongside any relevant footnotes and analysis.
If you are utilising FRS 105, the financial reporting standard for micro-entities, then you will only be required to submit your Statement of Financial Position and the accompanying footnotes.
What’s Due: VAT Return
If you’re VAT registered, it’s also likely you have a VAT return due at the same point in time. While it isn’t part of the financial year-end per se, it will be most easily dealt with while you are working through the figures. As Making Tax Digital comes into force 1st April it has never been more important to have your figures clearly organised in a digital format.
To minimise disruption on an annual scale, ensure you have a clear plan and deadlines. Make sure your employees understand when the year-end takes place and know what will be expected of them around that time.
Make sure your accounts are up to date. Good accounting software can make or break you here. If you use software such as Xero, you should have all transactions uploaded alongside the paperwork to back it up. You will need to ensure everything is correctly recorded by reconciling your bank statements and outstanding debtors and liabilities.
You will also need to decide if you are issuing dividends to your shareholders. If you are, the correct paperwork will need to be created and the dividends included in your final accounts.
If HMRC query your accounts it will be a lot less stressful if you know you have everything to hand, be it digitally or in a traditional filing system. Check all documents have made it to their correct home. If they haven’t look at creating a document-handling process to give clear instructions to staff members.
This is also a good time to perform some housekeeping; if you have any bad debts that will not be paid, this is the time to tidy them up by writing them off.
If you use Xero or similar software, you will want to check the data and examine any issues flagged in reports. If everything looks as it should ensure you have a backup copy in the event of a system failure.
As part of the financial year-end scrutiny HMRC will examine your payroll and staffing expenses. Make sure your tax and National Insurance calculations are correct else you could end up footing an unexpected bill.
Your tax return deadline will be 12 months after the end of the year or period that it covers. Your Corporation Tax will be due 9 months and 1 day after the end of your financial year. Your accounts will need to be with Companies House within 9 months of your year-end. These dates should be placed on your calendar but it’s worth remembering that getting them in early may save you deadline stress.
Failure to file with HMRC will ensure late filing penalties. These begin at £100 for a day and double to £200 after 3 months. If you still haven’t filed, it is time to get an accountant involved and your penalty will now be a percentage of your tax bill. Failure to file with Companies House begins at £150 for a delay of up to a month. Failure to file in subsequent months can rack up quickly to £1,500 if you are more than 6 months late. And it’s worth noting that failure to meet the deadline in the subsequent year will double the penalties.
It can be hard to know which expenses you should claim, when asset write-offs are most beneficial and how many other figures should be dealt with. If you are using Xero, we can help at any step in the process. Whether you need help finalising some figures or just don’t know where to start we will happily step in and assist you. If you are currently using different accounting software, we can also help you transition seamlessly to Xero.
Don’t leave it to the last minute and stress over deadlines. Have a clear plan and know when to ask for help.
The best time to start is now.