Year-end accounts preparation: what your accountant needs

Good year-end accounts preparation ensures that your records are ready before your accountant gets to work.

If invoices are missing, bank accounts have not been reconciled, or personal and business spending have become mixed, the accounts can take longer to prepare. Your accountant may need to come back with questions. That can create pressure and extra costs as the filing deadline gets closer.

For private limited companies, annual accounts are usually due at Companies House nine months after the company’s financial year end. Corporation Tax is usually due nine months and one day after the end of the accounting period.

That means it is worth preparing early. Good records can help your accountant work efficiently, spot issues in good time and give you a clearer picture of the company’s profit, tax position and financial health.

What should you send your accountant?

The exact information needed will depend on your business and how your records are kept.

For most limited companies, your accountant will usually need records in five main areas.

1. Income and expenses

This includes sales invoices, purchase invoices, receipts and details of any business expenses paid personally by directors or employees.

2. Banking and finance

Your accountant may need bank statements, bank reconciliations, loan agreements, hire purchase agreements and details of other finance arrangements.

3. Payroll, VAT and tax records

This can include payroll reports, pension contribution details, VAT returns and any relevant tax correspondence.

4. Company and director records

You may need to provide dividend records, director’s loan account details and notes on any payments to or from directors during the year.

5. Assets, stock and unusual items

Your accountant will need details of asset purchases and disposals. If your business holds stock or has work in progress, those figures may also be needed. You should also flag any unusual transactions, grants or funding received during the year.

If you use cloud accounting software, your accountant may already have access to much of this information. Even so, it is worth checking that the records are complete and up to date.

Cloud software can help, but it does not remove the need for accurate bookkeeping.

What should you check before sending the records?

Before handing everything over, it is worth doing a few simple checks.

Are the bank accounts reconciled?

The bank balance in your accounting software should match the actual bank balance at the year end.

If it does not, there may be missing transactions, duplicates or items posted incorrectly.

Are all invoices and receipts included?

Make sure sales invoices, supplier bills, receipts and expenses have been added to the records.

This includes business costs paid personally by directors or employees.

Are any transactions unclear?

If there are payments you cannot identify, make a note for your accountant.

It is better to flag these clearly than to leave your accountant to guess what they relate to.

Have dividends and director payments been recorded properly?

The director’s loan account and dividend records often need careful checking.

Your accountant will need to know what has been taken as salary, dividends, expenses, loan repayments or personal drawings.

Are large purchases supported by paperwork?

If the company bought equipment, vehicles, computers or other assets, keep the invoices and any finance agreements.

This helps your accountant deal with the purchase correctly in the accounts.

What can cause avoidable delays?

Some year-end queries are unavoidable. Others come from records that could have been checked earlier.

For example, your accountant may need to ask follow-up questions if supplier invoices are missing, bank accounts are unreconciled, or personal costs have been paid from the business account.

Delays can also happen when transfers between accounts are unclear, old unpaid invoices have not been reviewed, or stock and work in progress figures are not ready.

Director’s loan account entries can also cause questions if payments to and from directors have not been explained.

None of these problems is unusual. However, they are much easier to deal with when there is enough time.

When should you start year-end accounts preparation?

It is sensible to review your records before the financial year ends, rather than waiting until the accounts are due.

This gives you time to find missing paperwork, correct bookkeeping errors and ask your accountant about anything unusual.

It can also help you understand your likely profit and Corporation Tax position earlier.

Leaving everything until close to the filing deadline can make the process more stressful. It also reduces the time available to fix problems.

Need help with year-end accounts preparation?

THP helps businesses prepare annual accounts, check accounting records and deal with Corporation Tax returns.

If you would like this year’s accounts process to run more smoothly, speak to a member of the THP team on 0800 6520 025 or contact us using the  contact form below.