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Contents

  1. 1. Can I do my own end of year accounts?
  2. 2. What are the penalties for filing my accounts late?
  3. 3. Can I amend my end of year accounts' date?
  4. 4. What do I have to file at the end of a financial year?
  5. 5. Summary

Can I do my own end of year accounts?

October 5, 2021
There are many legal requirements for limited companies and filing annual reports at the end of each year is just one of them. If you don't know much about accounting, you might understandably find this intimidating.In June 2021, there were over 4.7 million companies on the Companies House register, every one of them responsible for filing accounts to Companies House and HMRC at the end of each financial year, with small business owners and sole traders risking accumulating hefty fines for failing to do so.In this article, we'll walk you through the process of compiling your end of year accounts, what to include in your end of year accounts and the key deadlines to keep in mind.

Can I do my own end of year accounts?

If you are self-employed or the director of a limited company, you can do your own end of year accounts. However, if you're not familiar with accounting or bookkeeping processes, there's a strong chance you might find this a little tricky.Alternatively, you could file your end of year reports through Ember. We can prepare the accounts for you, saving you a headache at the end of each financial year by guaranteeing that your accounts are safely filed with HMRC and Companies House. 

What are end of year accounts?

An end of year account (also known as a statutory account) is a document detailing your company's profit and loss throughout the financial year. It will also contain a list of your assets, liabilities and the overall value of the business. The financial records need to be prepared at the end of the company's financial year so that HMRC can check you're paying the correct amount of tax. This information is compiled in a document called a balance sheet. It helps form your company's tax return and will show how much Corporation Tax you need to pay based on your company's profits.Your limited company accounts must meet one of the following two standards: International Financial Reporting Standards or the New UK Generally Accepted Accounting Practice. We can advise you on these standards to make sure that your own limited company accounts meet these criteria. 

What do I need to include in my end of year accounts?

To make life easier, it's a good idea to have an effective filing system to keep track of all the receipts and records you accrue throughout your financial year. Every statutory account needs to include the balance sheet, which shows everything the company owns. You should also include the profits and loss account, which shows how many sales your company has made, as well as running costs.

Balance sheet

Your company accounts need receipts, such as up to date bank statements to prove your income for the financial year. The income records should also show outstanding debtors, such as sold goods that haven't yet been paid. The balance sheet should also include any debts that your company owes, as well as investments, capital and reserves. Your detailed accounting records should include a list of the fixed assets that the company owns. This includes the cost of things such as IT equipment, vehicles and business premises.As well as registering your fixed assets, you must also do a stocktake of physical goods and work out the value. This should be included in the report to show how much your company owns in terms of stock at the end of each financial year.The statutory accounts will also be sent to the company directors along with Companies House and HMRC. You should therefore include the shareholders' funds on the end of year accounts, as well as the cash in the bank and in hand. 

Profit and loss account

Along with a balance sheet, you will need to submit a profits and loss review. This will detail your company's turnover from the past financial year, the cost of sales and your gross profit. Your profits will be calculated after you have finished deducting the money for payroll, taxes and allowable business expenses. We can help you keep track and run payroll so that all of this information is in one place. 

Director's report

This report is produced by the company directors and gives a brief overview of the current financial state of the company. It helps the Companies House and HMRC to see how healthy the company is, as well as a projection of whether the company is likely to expand. A director's report will also relay how well the company is following financial and accounting standards. If you are running a small company, you can choose whether or not to send the director's report and profit and loss information to Companies House. You won't have to be audited and you can send abridged accounts to Companies House. An abridged account is a simpler summary of your company's balance sheet. It must contain the director's name and signature to validate it. You must also have the permission of all company members to send an abridged version. Companies are classed as small if they have two of the following:
    Fewer than 50 employeesA turnover of £10.2 million or lessA balance sheet with £5.1 million or less

When is the filing deadline for the end of year accounts?

Statutory accounts are due to be filed with Companies House nine months after the end of your company's financial year. You can choose the dates that you want your company's fiscal year to start and end on. If your financial year ends 31 January 2022, for example, you would need to submit the statutory accounts by 31 October 2022. The standard tax year runs from 6 April to 5 April of the following year, but your company's financial year can be adapted to suit your needs. You might decide to schedule your end of year accounts to a quiet period in your business' year, for instance. New limited companies have to file their first accounts 21 months after registering with Companies House. 

Who do I file end of year accounts with?

We can file your statutory report quickly and efficiently following the end of your company's financial year. The report will then be sent to HMRC, Companies House and your company shareholders. Any information given to Companies House will be publicly available. Your annual accounts are used to form the basis of your tax return, which is due 12 months after the accounting period for Corporation Tax ends. 

What are the penalties for filing my accounts late?

Just like any HMRC deadline, you can face penalties if you file your statutory accounts late. Your company will automatically receive a penalty notice from HMRC after missing the deadline and you will be faced with the charges listed in the table below.
Time after the deadlinePenalty
Up to 1 month£150
One to three months£375
Three to six months£750
Six months or over£1,500
The penalty is doubled after missing deadlines for two years in a row. If a limited company misses several deadlines, they can be struck off the Companies House register and must cease trading.

Can I appeal against a penalty?

There are occasions when HMRC or Companies House might make a mistake. In this instance, you can appeal against a penalty if you feel it has been unjustly given. To query a penalty notice, you need to give a specific reason as to why you're appealing and include relevant details, such as the accounting reference date. You will need to circumstantially prove why you couldn't provide your financial year-end accounts on time. The appeal will be denied by HMRC if you give reasons such as:
    You didn't know when or how to file the reportsThese were your first accountsYour company is dormant and no longer tradingYour company is a charity or a flat management companyYou can't afford to payAnother director is responsible for filing the accountsIt was your accountant’s (or anybody else’s) faultYour accounts were delayed or lost in the postThe directors live or were travelling overseas
If you are eligible to apply, you must send your appeal to Companies House via [email protected]. A response should be sent within 20 days and your penalty will not be processed whilst your appeal is considered. 

Can I amend my end of year accounts' date?

It is possible to adapt and change your company's financial year-end or (as it's otherwise known) the 'accounting reference date'. Gov.uk states that you can only change the dates for your company's previous financial year or the current one.The financial year can be shortened by a minimum of one day, or extended to a maximum of 18 months. This can happen once every five years, unless there are exceptional circumstances, such as your company going into administration or you have direct permission from Companies House. Unfortunately, you cannot change the dates of your financial year if your accounts are already overdue. Make sure that you have prepared for the deadline when compiling your records so that you have plenty of time to submit them.   

What do I have to file at the end of a financial year?

Along with the statutory account, you will need to pay Corporation Tax nine months and one day after the Corporation Tax accounting period ends. A company tax return should be submitted 12 months after the Corporation Tax accounting period ends. You also need to file your confirmation status for your company with Companies House. Make sure to sign up for email alerts so that you're notified about the upcoming confirmation status deadline.

Summary

Compiling your own end of year accounts is a lengthy process and can be difficult if you don't have much accounting experience. It can be daunting having to sort through the various receipts and records from throughout the financial year, as well as make note of the company's profits and losses. You should be keeping detailed accounting records to make sure that your company's accounts are accurate. The financial statements will be used as a guide to show how much tax a company of your financial position should be paying. Your statutory accounts should include a list of your company's assets, the company's sales and expenditure records of the relevant financial year. You can prepare simpler account records if your private limited company is small, although you will still need to include financial year notes. It's mandatory to file end of year accounts, but it doesn't have to be complicated. With Ember, our accounting software and team of qualified accountants can help keep you on top of your records, making submitting them at the end of the year a breeze.
Rachel Cameron-Potter
Rachel Cameron-PotterContent Marketer

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