A company’s year-end is the date their accounting period ends for the year. From this date, you have 9 months to file your annual accounts with HMRC and Companies House as a legal requirement, excluding sole traders. In simple terms, year-end accounts are a summary of your business’s overall performance for the year; however, you will need to refer to numerous sources of information in order to keep the most accurate record of incomings and outgoings.
Preparing your year-end accounts
If you are a small business, it is likely you will prepare your statutory accounts using the financial reporting standard for micro-entities (FRS 105). The two documents you must submit to Companies House with your accounts are a statement of financial position and footnotes. You will also need to submit your year-end accounts to HMRC simultaneously with your company tax return.
What do you need to include?
- Director’s report
When filing your accounts with Companies House, a director’s report is included to summarise the business’ performance over the year, thoughts on the current position and prospects for the future.
- Income and expenditure records
This should include all receipts for both sales and purchases, as well as latest bank statements. You should also list your debtors and creditors and organise them according to how important they are.
- Balance sheet and profit and loss (P&L)
You are required to carry out financial reporting; a balance sheet will go into detail on assets and liabilities for the company’s financial year. A P&L account summarises income and expenses to give the total profit or loss for the accounting period, so you will need to ensure you have accurate, up-to-date records of these.
- Explanatory notes
These go alongside your balance sheet and profit and loss account so that you can provide an explanation of your business incomings and outgoings for the year.
From the end of your financial year, you will need your accounts filed with Companies House within 9 months. Usually, the accounting period for corporation tax is the same as the financial year, but you have 12 months from the end of the period to file your tax returns. Should you not file your tax returns and year-end accounts on time with HMRC or Companies House, you are liable to pay penalty charges, which increase over time.
The penalty for limited companies year-end accounts being up to a month late is £150, rising to £375 between one and three months, £750 between three and six months, and £1500 if over 6 months late. You are also running the risk of your company being struck off the Companies House register, so it is essential to avoid this.
For the most up-to-date information when filing your year-end accounts, it may be worthwhile to check the Companies House website. Here at Omer & Company, we can take care of the entire year-end accounts filing process on your behalf, taking the stress off of your shoulders and leaving you to concentrate on the important task of running your business. If you would like to discuss our accounting services with one of our experts, give us a call on 020 8850 0700 or email firstname.lastname@example.org.