Year end accounting can be a daunting task for new limited companies. But after reading this article, you will feel much more prepared to take on the task!
UK limited companies are legally required to submit their year end reports to HMRC and Companies House. In this article, I will explain what information you will need to report, the reporting deadlines, and a simple year end checklist.
What is a year end?
When a company is incorporated, they will receive an accounting reference date (ARD) which is the last day of the month in which they were registered. For instance, if a company registered as limited on January 13th, their ARD is January 31st. Therefore, their financial year runs from February 1st to January 31st.
The financial year can be changed if needed and corresponds to when the business pays corporation tax.
The year end is when limited companies need to gather financial reports to submit to HMRC, Companies House, and stakeholders in the company.
What information do I need to report for my year end?
Before the deadlines, you will need to submit two statements to HMRC and Companies House which can either be submitted together or separately. They should also be sent to your shareholders.
The two reports that need to be submitted for private limited companies are a Company Tax Return and statutory accounts which will determine how much corporation tax you owe.
Company Tax Return
The Company Tax Return (CT600 form) outlines your businesses turnover, income, expenses, and any tax deductions or relief.
You can submit your Company Tax Return through your HMRC online account. All of the information you will need to provide can be found on your balance sheet and profit and loss statement. However, if you’re not entirely confident in filing the return yourself, it would be beneficial to seek help from an accountant.
Statutory accounts, also known as annual accounts, include your company’s balance sheet, profit & loss statement, and any additional notes about the accounts. In certain circumstances, you may also have to include a directors’ report and an auditor’s report.
The statutory accounts need to be submitted to Companies House either online or by post. You should also provide these to your shareholders.
If you are a smaller limited company of less that 50 people, you may be able to submit less documentation. You can find the requirements on the UK Government website.
What is the deadline for year end reporting?
As with anything government-related, there are strict deadlines for submitting your year end documents. If you miss a deadline, you will incur fines starting from £150 up to £1500 from HMRC.
Below, you can find a chart of the deadlines for year end reports. Be advised that the deadlines are not always based on your financial year, but may correspond to your accounting period for corporation tax.
Due to the COVID-19 pandemic, the government has extended the deadline for filing your statutory (annual) accounts. If your filing deadline is between June 27th 2020 to April 5th 2021, then you can file your accounts 12 months after the end of your financial year.
What other reporting duties do limited companies have?
Along with your year end accounting, there are other reporting duties that are required for limited companies. These include:
- VAT Returns: VAT Returns must be submitted by any UK VAT registered business to HMRC on a quarterly basis. This report outlines any VAT you owe to HMRC, or any to be reimbured to your business based on your transaction history from the quarter.
- Confirmation Statement: A confirmation statement must be sent to Companies House every year to ensure they have the most up to date information on your business and its directors.
Year end checklist
There is a lot of information in this article, so I thought I’d sum it up with a checklist to make sure you are ready to file your accounts!
- Prepare in advance: Start thinking about your accounts at least one month in advance to ensure any issues are resolved and you don’t have to pay any late fees.
- Check your payments: Go through your overdue invoices and chase down any remaining payments before the year end.
- Gather your expenses: Expenses you record will lessen the amount of corporation tax you pay. Make sure you have all of the receipts and all expenses recorded for your business.
- Round up your paperwork: Any time you submit your tax return or accounts, you will need to back these up with necessary paperwork in case there is a dispute. Make sure you have all of your bank statements, invoices, receipts and supplier records.
- Save backups of your data: Always save a backup copy of your financial data, either in paper form or online. You will need to save this information for 7 years so I would recommend using an invoicing software or saving it on the cloud.
- Accounting reports: The balance sheet and profit and loss statement are necessary accounting documents for your year end. Make sure these are correct by cross checking them with your invoices and expenses. Also prepare your directors’ report if required.
- Hire an accountant or submit your year end returns yourself: Hire an accountant if you’re not confident in submitting the reports yourself. Alternatively, if you are certain that you have all of the required documentation, you can submit your year end documents to HMRC online using your Government Gateway ID.
Using invoicing software to gather financial reports
Preparing your year end documents may seem tedious and difficult, but it doesn’t have to be! With invoicing software, all of your financial records are automatically created and updated as you conduct your business.
With Debitoor, your balance sheet and profit & loss statement will update any time you record an expense, issue an invoice, or add a payment. All you will need to do for your year end is review the documents, input the data on your Company Tax Return, and submit them to HMRC and Companies House.
On top of that, your VAT Report is also automatically synched so you can submit that directly to HMRC from the Debitoor software.
At Debitoor, we do our best to make accounting as simple as possible. Feel free to give it a try with a 7-day trial.