When you run a business, one of the big dates in your calendar is the end of the year. This doesn’t always correspond with the end of the calendar year in December but can either be the end of the financial year at the end of March or your business year. Whatever the case, there needs to be an end of year checklist but what should be on it?
Why year-end matters
The year-end is when you are required to submit certain documents and information to HMRC regarding tax and national insurance. It is also important because this is the date that the clock starts ticking to submit various documents and information – failure to catch these deadlines can result in fines or penalties from the tax department.
Year-end can also be a good time to take stock of the company’s financial position and see how things are going to make plans for the year ahead.
The Company Tax Return (CT600) is the statement that details the income of the company less any tax allowances and expenses. This leaves the remaining figure which is the profit that the company made and will be used to see how much Corporation Tax you need to pay.
The annual accounts for a business are made up of three parts:
- Income statement – showing the profit or loss the company made in a period
- Statement of financial position – a snapshot of the business value based on things like capital, reserves, liabilities and assets
- Footnotes – includes things like advances, credit and guaranteed granted to directors along with other financial commitments
Preparing for year-end
So, what needs to be done to get ready for this year-end documenting? If you have been compiling information during the year, then it is likely a time to summarise everything and ensure all the data is accurate.
You may want to make sure all the expenses listed for the business are legitimate and ensure none have been missed off. Remember the rule that expenses must be ‘wholly and exclusively’ used for business so anything that qualifies as this can be included in your account.
It is also a good time to make sure that you chase up any unpaid invoices with money still owed to the business. If you need to go down that route, you can also look into debt collectors or other options to sort out long overdue accounts.
Once everything is organised, it is best to have all the paperwork in place so that if HMRC requests any information, you can easily get this for them.
The other important thing to remember about year end is the deadlines. HMRC require a company tax return within 12 months of the end of the accounting period that it covers and any tax due needs to be paid within 9 months and one day after this period. Annual accounts are required within nine months of the year-end. If you miss these, you can face daily penalties and fines that are added to your account.
For help with your payroll, get in touch with Trace Payroll by using the details below. We are a payroll provider based in London that can help streamline your workflow and save you time in your HR department.