All limited companies (including Personal Service Companies) must submit documents to HMRC and Companies House at year-end.
HMRC requires information about income and expenditure in order to calculate the amount of Corporation Tax you have to pay. You must submit your accounts to Companies House as these records must be made public in accordance with the Companies Act 2006.
If you operate a limited company for your contracting work, this handy checklist will take the sweat out of year-end accounting.
1. Year-round discipline
Preparing your accounts for year-end need not be an onerous task. The key is to be disciplined with the maintenance of your books throughout the year.
Update your accounts spreadsheet or online accounting system on a weekly basis to keep track of all expenditure. Then, once a month, take time out to:
- Issue invoices
- Check that last month’s invoices have been paid – and chase anyone who owes you money
- Pay your bills
- Update your accounts spreadsheets with income and expenses
2. Accurate records
A disciplined approach to book-keeping should give you the peace of mind to know that your accounts records are accurate. Remember to submit your income and expenses spreadsheets to us at least once a quarter, ideally monthly, so that we can give feedback and advice about how much money to keep in the business to cover bills and which expenses you are entitled to claim.
It’s important to retain the relevant paperwork to support your accounts including copies of invoices sent and received, expense receipts, dividend notes and bank statements. Check that all invoices have been paid.
Keep everything up-to-date and in a labelled filing system so that you can quickly and easily locate any information you need now and in the future.
3. Review your expenses entitlement
HMRC allows you to make purchases which are ‘wholly and exclusively’ for business use. Before submitting your accounts, you should ensure you have claimed all legitimate business expenses as this will reduce your profit and the amount of Corporation Tax you have to pay.
4. Pay your bills & review your costs
Year-end is a good opportunity to review any costs associated with running your limited company. You may be able to get a better deal on professional insurance, for example. Make sure your bills are paid before you submit your year-end accounts.
5. Know your deadlines
Make sure you are aware of the deadlines which apply to year-end accounting, otherwise you may face penalties.
Year-end accounting deadlines for limited companies
|File annual accounts with Companies House||9 months after your company’s financial year ends|
|Pay Corporation Tax or tell HMRC
that your company doesn’t owe any
|9 months and 1 day after your ‘accounting period’ for Corporation Tax ends|
|File a company tax return||12 months after your accounting period for Corporation Tax ends|
Penalties for late filing with Companies House
|Time after deadline||Penalty for private limited companies|
|Up to 1 month||£150|
|1 – 3 months||£375|
|3 – 6 months||£750|
Penalties and interest for late filing with HMRC
|Time after your deadline||Penalty|
|3 months||A further £100|
|6 months||HMRC will estimate your Corporation Tax bill and add a penalty of 10% of the unpaid tax|
|Interest will also be charged on any Corporation Tax which is late.|
6. Review your finances
Your year-end accounts will give you all the information you need to review your company’s overall performance and to set new goals for the next financial year.
What to do next
It’s a good opportunity to talk to our team of specialist contractor accountants at Crest Plus who will help you to review your current status and understand what you need to do to build your business in future. Get in touch on 01244 684700.
You can find out more about our limited company accountancy services.
About Crest Plus
Crest Plus is one of the UK’s longest-established specialist contractor accountancy firms, with almost 20 years’ experience in supporting 350,000+ contractors in a range of industries, from construction to healthcare.
The company provides all the key payment options required by contractors, whether operating through Crest Plus’s umbrella company, Umbrella Plus; a limited company or through the Construction Industry Scheme (CIS).
Reliability, excellent customer service and attention to detail lie at the heart of the Crest Plus approach. The team is proactive in helping contractors with all aspects of compliance and finance throughout the year.