Tips and tricks for preparing for year-end
The year-end process can be time-consuming and resource intensive. For limited companies, it is a time to file corporate tax returns with HM Revenue & Customs (HMRC) and deliver annual accounts to Companies House.
Although timings and deadlines for year-end accounts and returns vary between companies, it always tends to be a stressful period.
Due to the challenges of the last few years and the additional pressures placed upon businesses by the pandemic and Brexit, many companies are finding it more challenging.
As your final calculation for Corporation Tax is calculated on your financial position at year-end, it’s vital to have everything in order. To make sure you and your business are prepared, here are some tips.
Resolve unpaid invoices
Businesses should look at their sales ledger for the financial year and make sure all transactions have been correctly invoiced and settled.
If any payments are outstanding, be sure to chase them and produce receipts linked to the work.
Many businesses now use online accounting software, which should automate these checks. Any unpaid invoices at the end of year-end should be recorded and reported if necessary.
Check for debts
Businesses should also look at their purchase ledger to confirm what is owed to suppliers and what has been paid.
This will help reduce errors, such as where supplier bills are entered into your system twice or payments made aren’t linked to the supplier’s bill. It is also good to check for duplicate invoice entries to prevent duplicate bank payments and correct your records.
Although most businesses will reconcile their bank records with their purchase and sales ledgers throughout the year, it never hurts to do a thorough final check at the end of the year, not only to ensure you are reporting your profits correctly but also to prevent fraud and error.
Apparent discrepancies between your internal accounts and the cash situation within your bank account should be explained. This could be due to timing issues, such as where payments bridge a month, but may also indicate fraud.
Conducting a check will also highlight where any cheques or payments from customers weren’t registered or failed or indicate that bank fees may be due where cash in the bank wasn’t maintained at a sufficient level.
Reassess your payroll
Year-end is a good time to look over your payroll records, including net wages, NICs and PAYE to ensure they are correctly reconciled. Employers are legally obligated for any errors in NICs or income tax, and HMRC is currently very hot on this issue through its ‘one to many’ letter campaigns which spot discrepancies between employers’ records and self-assessment tax returns.
Don’t forget, employment costs can have a significant effect on your profits and could impact your Corporation Tax liabilities.
Depreciation and fixed assets
You should make sure that assets are properly recorded within your balance sheet and that the correct amount of depreciation is calculated.
If you need assistance with your year-end, please contact our accounting team at email@example.com or 01494 552100 or speak to your usual Seymour Taylor representative today.
This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 14 January 2022.