Financial Reporting Services in SheffieldFinancial Reporting services in Sheffield, Doncaster and Northampton
For sole traders and partnerships, year-end accounts will form the basis of the business owners’ self-assessment tax return.
For a partnership, the year-end accounts will also state the balance on each partner’s current account. For owner-managed limited companies, the limited company accounts will house details of the directors’ salaries and the dividends paid to shareholders, which will need to tally with their self-assessment tax return.
The year-end accounts provide invaluable information about your business. You can see if the margin on your sales prices is set appropriately and how the latest performance compares to last year.
Movements in sales and expenses are visible, allowing you to make better decisions in the future. Unusual amounts are highlighted and can then be investigated. Having year end accounts brings you closer to your business and will help drive success.
Banks will also prefer to see a set of accounts for self-employed applicants looking to raise finance or apply for a mortgage.
Deciding on a year end
Limited companies, partnerships and sole traders are free to pick whatever year end they like.
Many business owners will pick a calendar year or the tax year (either 31st March or 5th April).
Picking the tax year will make your tax liability based on the latest finalised accounts and therefore as current as possible.
Some business owners prefer to have a tax year end, because they have a better feel for what their tax liability might be. Opting for the 31st March or 5th April will also avoid any complicated calculations for sole traders or partners.
Alternatively, you might choose a year end that suits your business. A quiet time of the year when you can have the time get everything together may be the perfect time for your business.
You should look to prepare sole traders accounts and partnership accounts well ahead of the tax return deadline of 31st January.
Limited companies typically have nine months from their year-end to complete their accounts, but it’s always best to check on Companies House’s website what the company accounts filing deadline is.
Rushing can lead to errors and there may be receipts or bank statements you need to find. Give yourself as much time to prepare the accounts as possible.
It also allows you to consider if you’ve claimed everything you’re entitled to and whether there are any tax planning opportunities available.