What action is required at a Company Year End?

A company year end is a significant point in the annual cycle. There are key considerations as it approaches, to make sure opportunities for tax savings or maximising profits aren’t lost, but what about the actual company year end process? What should be done in your software, and what do you need to give your Accountant so they can prepare your Accounts?

There are some tasks to get up to date as quickly as possible in your Software:

  • Enter all of your invoices from suppliers, and send all of your invoices out to your customers.
  • Make sure all of your bank transactions are reconciled.
  • If you have stock, make sure you’ve done a full stock take at the year end. This is essential to have an accurate valuation in the accounts. Some stock may be obsolete, and no longer saleable. If this is the case, break this figure out.
  • Consider whether ‘Work In Progress’ should be accounted for. This is where projects have been started before the year end, but finished afterwards. If this is the case, you’ll need to calculate the percentage of the job that was done at the time of the year end. This percentage is then applied to the costs and income of the job, with the balance being carried into the next year.

Once all of the above have been done, you can then confirm to your Accountant that everything is ready for them to start work on the Accounts!

In the meantime, if you’re using Xero, Quickbooks or SageOnline you can carry on as normal, and can access all of your usual reports which stay up to date and accurate.

Sage does things differently…

All of the above apply to your software, regardless of whether you use Xero, Quickbooks or SageOnline.

The Sage desktop packages though, do things differently! 

The non-cloud versions of Sage allocate transactions into monthly ‘pots’ and draw reports from those. Once you reach the end of Month 12, everything new goes into an unallocated pot, until a proper ‘year end’ is processed in the system. Sage guidance says that this ‘year end’ cannot be done until the Accounts have been finalised.

Given that this process could be several months after the year end, this isn’t good news! Your reports stop, and you start working blind until the accounts are complete.

There is a way round this…though it isn’t a Sage recommendation.

This requires two ‘year ends’ to be processed. The first is processed when the books are complete and the other, secondary, ‘year end’ when the finalised year end journals are posted.

We’ve followed this process many, many times over the years without any problems, but Xero, Quickbooks and Sage Online are much easier!

What other information might your Accountant need?

With access to your online bookkeeping package, your Accountant can find most of the information they’ll need to prepare your company year end accounts. It would be helpful though, to make sure that they have the following:

  1. Copies of all bank statements covering the year end date.
  2. Copies of any multi-year agreements for either sales or costs, e.g. leasing documents, loan agreements etc.
  3. If not included in the business records details of any work-in-progress or stocks and the year end.
  4. Details of the private element of all business expenses i.e. motor expenses (a mileage log is required), telephone etc.
  5. A summary of your household utility costs to calculate use of home as office charge, to include the number of rooms in the house excluding kitchens and bathrooms. Include an approximate percentage of time your office is used for business use.
  6. If you use your own vehicles for business, the number of business miles completed.
  7. Your Accountant will need to adjust for staff holidays that have either been taken in advance or where there are days left to take at the year end. If your year end matches your holiday year and you’ve not agreed to allow any annual entitlement to be carries forward all that’s needed is confirmation that nothing needs adjusting. If your holiday year is not the same as your accounting year your Accountant will need to know:
    1. The holiday year end date.
    2. For each employee, their annual holiday entitlement and the number of days they have taken at the accounts year end date.

Not all of the above will be relevant to every Company year end. There may also be some details that are particular to your business that are not included. If this is the case, your Accountant will warn you in advance.

This list does though give you a really good start in providing all that you need for your Accountant to get on with your company year end accounts promptly.

This in turn means that your year end accounts will be far more relevant to you!

If you’re unsure what you may need to provide, how or where to find the information or how to make good use of your year end accounts, why not get in touch? We’re here to help!

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