A lot of Limited Companies have their year end at the end of March to align with the tax year so I thought we could have a look at a couple of points to consider before the year end.
STOCK AND WORK IN PROGRESS
If you hold any stock you will need to include a valuation of stock held at the year end date. The easiest way to get an accurate stock valuation is to complete a stocktake. This means counting the stock held at the year end multiplied by the cost. If you use an accounts software for stock control there will be reports that you can run at the year end.
If you are a service business then you will need to make sure everything is billed or any time spent not yet billed is noted so that it can be included in your year end accounts.
PURCHASES
Now may be a good time to make any large purchases such as that new laptop (cashflow permitting) so that you get the Corporation Tax relief now rather than delaying the purchase until April when you wont get the tax relief for another full year.
PENSIONS
If you have excess cash a tax efficient way to extract the cash out of the Limited Company is by the Limited Company paying a pension contribution to you. This needs to be actually paid before the year end in order to get the Corporation Tax relief.
The drawback to this is that the cash is tied up in your pension pot.
If this is an option you wish to explore it is worth getting in contact with your Independent Financial Adviser ASAP.
ACCOUNTING RECORDS
It is worth making sure your accounting records are up to date and you have the supporting documentation for all transactions as soon as possible.
Not only are you legally required to maintain adequate accounting records this will also make sure you don’t forget about things as they will be current rather than looking to put everything together nearer to the accounting deadline.
If you are still keeping manual records now might be the perfect time to look at switching to an accounts software such as Xero or Quickbooks as there are lots of time saving benefits.
DEADLINES
The Statutory accounts need to be filed at Companies House within 9 months of the year end (i.e. by 31st December 2020).
The Corporation Tax Return needs to be filed with HMRC within 12 months of the year end (i.e. by 31st March 2021). However, any Corporation Tax due needs to be paid 9 months and 1 day after the year end (i.e. 1st January 2021).
Although the filing deadlines are generous it is well worth completing the accounts as soon after the year end as possible so that you know the current position of the Company and how much your Corporation Tax bill is (and have time to save for it if necessary).
BUDGETS
With your company year end approaching now is the perfect time to consider putting some budgets together for 2020/21 in order to help drive your business forward.
If you would like to discuss any of the above points in more detail or you would like to see how Canary Accounting Limited can help you please feel free to give me a call.
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