Year End Accounts
Accounts are generally produced at the end of the business year and provide an important overview of trading performance
If you are a sole trader or partnership, the year-end accounts form the basis of your self-assessment tax return to HMRC.
For owner-managed limited companies, directors and shareholders also need to complete a self-assessment return each year and the limited company accounts will include details of the directors’ salaries and the dividends paid to shareholders providing the figures to include on the return.
Properly prepared year end accounts can provide invaluable information and insights about your business such as the gross profit margin and how this has performed compared to other years. You can see if your sales prices are set appropriately to return an acceptable margin. Proper comparison of sales and expenses allow you to make better decisions in the future about your business and improve the business profitability.
Banks will invariably wish to see a properly prepared set of accounts for both self-employed businesses and limited companies who are seeking to raise finance or apply for a mortgage.
Filing Your Accounts
The tax return deadline for sole traders and partnerships is 31st January, failure to file your self-assessment by this date will result in a fine from HMRC. Limited Companies typically have nine months from their year-end date to complete their accounts, but this may differ in the first year.
It is always best to allow yourself as much time as possible to prepare for the year end accounts process, as rushing the process can lead to errors and missing documents can lead to delays. It also allows you to consider if you’ve claimed everything you can and whether there are any tax planning opportunities available.
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