Year-end accounting preparation probably isn’t top of your July to-do list, but if your company’s financial year ends in August or September, you’re already inside the window where a bit of early effort pays off. Last month, a building contractor client in Gravesend rang us in a flap because his year end was six weeks away and he hadn’t started pulling his numbers together. We got him sorted, but it was a stressful few weeks that could easily have been avoided.

Most people associate year end with March, thanks to the tax year deadline, but plenty of companies choose an August or September year end, often because it fits around a quieter trading period. If that’s you, now really is the time to start preparing for your company year end, while there’s still enough time to fix problems, capture tax reliefs, and avoid the scramble that comes with leaving everything until the deadline.

Why start three to six months out?

Your corporation tax is due nine months and one day after your year end, and your accounts must be filed with Companies House within nine months. That sounds like plenty of time, but the work that makes those figures accurate happens before your year end date, not after it. Starting now means you can still influence this year’s numbers rather than simply reporting on them.

Your year-end accounts checklist

Here’s exactly what to work through in the run-up to your year end. Tick these off as you go.

Accruals and prepayments

☐  Review regular costs paid in advance (insurance, software, subscriptions) and identify anything that covers months beyond your year end – this is a prepayment

☐  Identify supplier costs relating to this year that haven’t been invoiced yet – this is an accrual

☐  Check both are recorded so your profit reflects what actually happened, not just what’s been paid or billed

Not sure where to start with accruals? Our guide on accounting for accrued income covers the principles in more detail.

Fixed asset register

☐  List every piece of equipment, vehicle or machinery bought this year

☐  Note anything sold, scrapped or no longer in use

☐  Check purchase and disposal dates match your bookkeeping records

☐  Flag any assets missing from the register so depreciation and capital allowances can be calculated correctly

Inventory valuation (if you hold stock)

☐  Carry out a physical count rather than relying on system records

☐  Write down anything damaged, obsolete or unlikely to sell at full value

☐  Reconcile the count against your accounting records and investigate any discrepancies

Bad debts

☐  Review your aged debtors report line by line

☐  Identify invoices genuinely unlikely to be paid

☐  Write these off before your year end so you’re not taxed on income you’ll never receive

Depreciation and capital allowances

☐  Calculate depreciation for each asset based on your fixed asset register

☐  Remember depreciation isn’t tax-deductible – capital allowances are the tax equivalent

☐  Check whether qualifying plant and machinery purchases can use this year’s Annual Investment Allowance, worth up to £1 million

Our guide to capital allowances explains this in more depth if you’re planning any equipment purchases before your year end.

Tax deductions to capture before year end

☐  Consider bringing forward planned equipment purchases to use this year’s Annual Investment Allowance

☐  Review whether pension contributions could reduce your taxable profits

☐  Check for legitimate expenses that may have been missed during the year

Your month-by-month checklist

If your year end falls in September, here’s how the run-up typically breaks down.

July

☐  Pull together management accounts to date and flag anything unusual or unexpected

☐  Review your fixed asset register and note any purchases or disposals that need updating

August

☐  Chase outstanding invoices and review your aged debtors list for write-offs

☐  Plan your stock count if you hold inventory

☐  Consider any last equipment purchases to use this year’s Annual Investment Allowance

September (typical year end month)

☐  Carry out your stock count, if applicable

☐  Finalise accruals and prepayments

☐  Gather invoices, receipts and bank statements ready for your accountant

October

☐  Send your records to your accountant promptly

☐  Start budgeting for the corporation tax due nine months and one day after your year end

Getting ahead of your year end

Preparing for your company year end doesn’t need to be a last-minute scramble. A little organisation now, while you’ve still got time to make decisions rather than just report on what’s already happened, makes for a smoother process, a more accurate set of accounts, and often a lower tax bill.

Need a hand getting ready for your August or September year end? Contact Adams Accountancy for a free, no-obligation chat about getting your year end accounts in good shape, or call us on 01322 250001. As always, no question is too silly when it comes to your business finances.

Frequently asked questions

When is my company’s tax due if my year end is in August or September?

Corporation tax is due nine months and one day after your year end, so a 31 August year end means payment is due by 1 June the following year, and a 30 September year end means payment by 1 July. Your accounts must be filed with Companies House within nine months, and your Corporation Tax return (CT600) is due within twelve months of your year end.

What’s the difference between an accrual and a prepayment?

An accrual is a cost you’ve incurred but haven’t yet been invoiced for, which needs to be included in your accounts even though the bill hasn’t arrived. A prepayment is the opposite: money you’ve already paid that relates to a period after your year end, so it needs to be excluded from this year’s costs and carried forward.

Do I need to do a stock count if I only hold a small amount of inventory?

Yes, even a modest amount of stock should be counted and valued at your year end, as it affects your reported profit and therefore your tax bill. The process doesn’t need to be complicated for a small business, but it does need to be accurate and consistently applied.

How far in advance should I start preparing for my company year end?

Ideally, start reviewing your position three to six months before your year end. This gives you enough time to make decisions that can genuinely improve your position, such as bringing forward equipment purchases or reviewing pension contributions, rather than simply tidying up figures after the event.

About the author

Michelle Adams is a qualified accountant and director at Adams Accountancy, with over 15 years of experience helping small businesses across Kent get organised and stay ahead of their compliance obligations. Michelle and her team believe no question is too silly when it comes to understanding your business finances.