When you run a private limited company, you are automatically obligated to comply with a number of different ‘statutory’ responsibilities. One such responsibility is to prepare annual accounts, covering the previous financial year, and to file the final product with Companies House.
We often find that, whether new to the game or more established, many business-owners come to us asking the same questions about year-end accounts and, ultimately, even when they’re equipped with the answers, they still feel much better knowing that we’re taking care of things for them.
To get you thinking about whether your year-end accounts are being taken care of, we address some of the key considerations associated with this particular requirement.
Q: How do I know what my year-end is?
For limited companies, your ‘year-end’ marks the end of your business accounting year. It is typically the last day of the month in which your company was incorporated as this is the default imposed by Companies House; for example, if your company was incorporated on 14 September, your year-end, sometimes otherwise referred to as your ‘accounting reference date’, would be 30 September.
Consequently, your first set of annual accounts will often cover a period that is slightly longer than a year.
However, the directors can choose the year end of their company subject to a few simple criteria so, if your business is new or seasonal, it is well worth discussing your accounting period with us.
Q: How do I go about filing year-end accounts?
Your company’s year-end accounts should be prepared using the company’s financial records as they stand at the end of the financial year.
Copies must be provided to all shareholders, individuals who attend the company’s general meetings, Companies House and HMRC, as part of your Company Tax Return (note that different deadlines will apply, and the return must be filed using iXBRL software).
If your company is small, a micro entity or dormant, you may be able to file simpler accounts, but there aren’t any exemptions and filing penalties will apply if you fail to comply.
Q: What should my statutory year-end accounts include?
The following should be included in a comprehensive set of statutory annual accounts:
- Director’s report
- Balance sheet
- Profit & Loss account
- Explanatory notes
If you are entitled to prepare small or micro-entity accounts, not all of these elements will need to be included in the version that you submit to Companies House.
Q: What records do I need to keep?
As a business owner, there are a number of ongoing accounting records that you need to keep. These include, but are certainly not limited to:
- records of income and expenditure;
- a register of assets within the business;
- records of other liabilities; and,
- if VAT registered, detailed reports showing the amounts declared and appropriate VAT invoices to substantiate input VAT claims.
With such extensive associated administrative demands, engaging the right support early on can be fundamental to you having the freedom to focus on what’s important to you – we suspect, running a successful and profitable business.
Q: My year-end accounts are just for the benefit of Companies House, right?
Wrong. Your year-end accounts are just as much, if not more, for your own benefit than for that of Companies House.
Done correctly, your annual accounts should give you a valuable insight into your financial performance over the course of the past year and a grasp of your financial standing as you enter the next. They are really one of the most important ‘business tools’ available to you as a business owner.
Our advisory approach means that whilst we get the job done by producing accurate accounts, from the records you provide, we also prioritise helping our clients to interpret the figures and facilitating discussion about what this means for their organisation.
We think of annual accounts as a ‘cyclical’ process and as such, are not just there to support you at year-end but all year round.
Your year-end accounts also form the basis of the Corporation Tax computation, and so are submitted to HMRC as an appendix to the Company Tax Return.
Q: Will there be penalties if I don’t file my accounts on time?
Wherever there’s a deadline, there is usually a penalty for missing that deadline; this fact is almost inescapable when you’re running a business.
Your annual accounts (with the exception of your first submission, which should be filed within 21 months of the date on which the Company was registered with Companies House) should be filed within nine months of your financial year-end.
Penalties range between £150 and £1,500, depending on how long after the original deadline your accounts are filed. The penalty can be doubled if your accounts are late two years in a row and, if you’re one of the worst repeat offenders, Companies House can take action to have your company struck off the register.
Q: Can my accountant assist me with producing and filing my accounts?
Yes! Your annual accounts are, without doubt, something that your accountant should be able to assist you with.
Don’t sit at home worrying about where to start; get the ball rolling and establish a dialogue with your adviser – remember, this is second nature to them. They have the skills to ensure you are fully compliant, and the IT infrastructure to get this task done efficiently.
Q: How long should it take my accountants to turn around year-end accounts?
Provided you have handed over all the documentation that your accountant requires, to prepare the accounts, we do our utmost to work towards a 30-day turnaround. On the flip side, it goes without saying that the process can take much longer than this if you fail to deliver records and other documentation in a timely manner, when they are requested.
If you have a specific deadline to meet, for example to satisfy your bank or parent company, please discuss this with us and a plan will be put in place to make sure your requirements are met.
How can George Hay help?
Our experts in Biggleswade, Huntingdon and Letchworth can assist you with the preparation of your annual accounts to ensure you comply with the relevant accounting regulations and to give you accurate financial information to use in your business.
As part of our partner led service, we are here to support you throughout the year, not just once a year when your accounts are produced.