Company Year End Accounts Checklist For Limited Companies
Sometimes company year-ends can be a challenging task most especially for a limited company director who is a first-timer, however, by using our extensive checklist, you will be aware of what exactly you need to do.
Understanding Company Year-End
A company year-end refers to the date when the accounting period of your company ends. This is also the date that a limited company will have to start sending their relevant documents to Companies House and HMRC.
Keep in mind that this is only an overview of what is needed for your year-end accounts. If you need help in filing your accounts for your limited company, then you can always seek the assistance of an accountant. They can help you in understanding your requirements or you could just visit the gov.uk website and browse through the detailed guidelines.
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Temporary Extension To Company Accounts Filing Deadlines
Due to the COVID-19 pandemic, HMRC made an announcement that they will extend the deadline for companies to file their statutory accounts. The extension will be applicable to those companies whose filing deadlines fall from June 27, 2020, to April 5, 2021.
In other words, if you are a limited company, then there is an extension in filing your accounts at Companies House, instead of nine months, the deadline is now extended to twelve months. Regardless of the extension, we strongly recommend that you should file your accounts at Companies House within nine months depending on the accounting period end date of your company.
On the other hand, the government has not yet announced if the deadline for the payment of your company’s Corporation Tax has been extended. This means that it will still be the same which is nine months and one day following your company’s accounting period end date. You will have to prepare your accounts in order to figure out how much tax you will have to pay to HMRC.
In case the filing deadline of your company is between June 27, 2020, and April 5, 2021, and you think that it is essential to take advantage of the deadline offered by the government, then you should get in touch with your client managers so they can discuss the details with you.
The extension of the filing deadline will not be applicable if the filing deadline falls on April 6, 2021, or later.
What Needs To Be Filed With HMRC
Company Tax Return
So, what does a Company Tax Return (CT600) contains? It comprises the details of your company’s income which will be deducted by your expenses and any tax allowances. Your profit will be the remaining amount. Take note that this amount will be used in the computation of your company’s Corporation Tax.
Annual Accounts or Statutory Accounts
The following are the Annual Accounts that you should submit to HMRC:
Income Statement – In this document, you will know if your company has made a profit or loss for the particular accounting period.
Statement of Financial Position – This will show the aggregate value of your business, depending on your assets, capital, liabilities, and reserves.
Footnotes – This contains some information about the transactions that are made between your company and its directors including advances, loans, and guarantees.
What Needs To Be Filed With Companies House
If you are making use of the financial reporting standard for micro-entities (FRS 105) in preparing your company’s annual accounts, then you are required to accomplish two types of documents from your company’s Annual Accounts to Companies House. These are the Statement of Financial Position and the Footnotes.
Take note that these documents that you have submitted at the Companies House will be published on their website, which means that anyone can view it.
What Should I Do To Get Ready For My Company Year-End?
Prior to preparing your Annual Accounts and Company Tax Return, there are a few things that you have to take care of.
Get Your Expenses In Order
The business expense that you claim will be taken from your company profits. This means if you have lesser profit, then you also have lesser Corporation Tax to pay.
Are you confused about what you can claim? According to HMRC’s rule, any expenses that are wholly and exclusively intended for business use can be considered as expenses. This means that if you have purchased something specifically for your business, then you can claim it as an expense.
If you are having doubts about what can or can’t be claimed, then you can always get some help from your accountant.
Gather All Those Overdue Invoices
As much as possible, the year-end of your company must be precise, so make sure that your debt collector is a few weeks prior and you need to follow-up those unpaid invoices if you have any. After placing the money in the bank account of your company, then you can start reconciling your accounts by using your accounting software in order to make sure that they are 100% accurate.
Gather All Your Paperwork
When you are gathering your company accounts together, you have to ensure that you’ve got all the receipts and records needed to support them. In other words, you have to get copies of credit card and bank statements from financial institutions, statements of account from suppliers as well as records of any other types of income that you receive. You must keep company records for at least six years starting from the end of the company accounting period that they are associated with.
What Are The Deadlines?
The deadline in filing your tax return will be twelve months after the end of the accounting period that is related to it. Unfortunately, if you miss the deadline, then you will be charged with a penalty. Although the deadline for paying your Corporation Tax will be separate. Typically, it will be nine months and one day following the end of the accounting period.
Within nine months of your year-end, you will be required to submit your annual accounts to Companies House. For first-timers, they must file them within 21 months from their registration date.
What Happens If I Miss The Deadlines?
Unfortunately, companies will have to pay some penalties, in case they miss the deadlines. This is done by HMRC and Companies House to inspire limited companies to file their documents on time. Keep in mind that these penalties will increase with time. Hence, if you have missed some deadlines on different occasions, then you can anticipate that it can cost you dearly, take a look.
Late Filing Penalties Declared By HMRC
Late filing penalty for one day is £100. For three months, you will be fined with another £100. If it reaches to six months then HMRC will compute your Corporation Tax bill and a 10% penalty charge will be added to your unpaid tax. Furthermore, if you have missed the deadline for twelve months, then another 10% will be added to any of your unpaid tax
In case you were late in three successive times in filing your tax return, then you will not be paying £100 for the penalties anymore, instead, you have to pay £500 each penalty.
Late Filing Fines Declared By Companies House
If you were late for up to one month, then the penalty will be £150. The late penalty charge between one to three months is £375 and £750 from three months to six months. If you were late for more than six months, then you will have to pay a penalty of £1,500.
Finally, keep in mind that if you were late in filing for two consecutive years, then the penalties will be doubled.
If you were unable to submit your Confirmation Statement and/or accounts on the deadline, then you will be fined. Aside from this, your company will be taken out from the Companies House register.
What Else Do I Need To Think About?
If you have a VAT registered company, either on the standard scheme or the Flat Rate Scheme, then most likely, the deadline of your VAT return will be the same with your company year-end. Most often, VAT returns are not considered as part of a company year-end, however, they usually concur with one another
If you are a limited company director, then you have to confirm your company information with Companies House at least once a year. In case you fail to file a Confirmation Statement then as the director of a limited company, you could be fined individually in criminal courts and at the same time, your company could be removed from the Companies House register.
It is a must that you file your Confirmation Statement once a year and it should be done within 14 days from its due date. Generally, the due date will be one year after your incorporation or one year from the date that you have last accomplished your Confirmation Statement. Regardless, if your company is dormant, you will be required to submit a Confirmation Statement.
The countdown towards your company’s year-end is the ideal time to think about your financial and tax planning. This can be a big help if you want to minimise your tax bill in the near future and also in the long run. Some of the options are including your spouse or partner in the business, make some payment into ISAs, or contributing some of your income to your pension.
Evaluate Your Suppliers
It would be great if you can conduct an evaluation of your service providers at least once a year. In this way, you can ensure that you are getting value for your money. So, why not accomplish it during your company’s year-end? In this way, you can eliminate those nonessential or overpriced suppliers and you can start fresh on your new financial year.
Need Some Help?
This checklist is for advisory purposes only and we always recommend that you should speak to an accountant to get more details. If you don’t have any, then you can always give us a call.