Annual accounts: A small business checklist

Posted May 30, 2014

It is a legal requirement of running a limited company that you submit annual accounts to HMRC detailing, among other things, your corporation tax calculations. There are certain tasks you or your limited company accountant need to complete to get your tax affairs in order – remember that your corporation tax is due within 9 months of the end of your financial year.

Here is a breakdown of what you need to prepare in order to submit your annual accounts:

1. Balance sheet

At the most basic level, your balance sheet is a breakdown report of your company assets and any outstanding monies you are owed. To complete your balance sheet, you will need to have a complete list of company property and associated values. You will also need to have a record of all outstanding invoices as of 4th April 2014 – the last day of the financial year.

Using this information you should be able to calculate your business’ current value.

2. Profit and loss account

The main bulk of your accounts, the profit and loss account shows a complete record of all transactions during the financial year. Your records should clearly indicate:

All of your income for the year
All of your expenditure over the same period
All of your running costs incurred during the financial year

Once complete you, and HMRC, should have a clear understanding of profit and loss over the course of the year. Ultimately this will determine how much corporation tax you pay over that period.

3. Notes about the accounts

You should also keep details any other information of which you think HMRC should be made aware. If you have questions about certain transactions or assets, it is extremely likely the tax man will too, so collect your answers together for submission with the rest of your accounts.

4. Directors’ report

Your annual accounts submission must also be accompanied by a report from the company directors which is intended to improve the transparency of your operations. The directors’ report is really intended for big businesses that have a large number of shareholders who need to be kept appraised of your performance. However businesses of any size need to complete a directors’ report as part of their annual accounts submission process.

5. Professional accountancy advice

Your annual accounts submission must meet one of two approved standards – the International Financial Reporting Standards, or the UK Generally Accepted Accounting Practice. Obviously you can try to ensure your submission matches these standards yourself, but you will probably find the services of a professional accountant to be much more time and cost effective – particularly if they help you avoid late payment penalties accrued as a result of filing an incorrect or incomplete set of accounts.