Year-end accounts season causes stress for thousands of business owners every year. Many discover problems too late – missing invoices, unreconciled accounts, or documentation gaps that could have been sorted weeks earlier.
Forward planning transforms year-end preparation from a crisis into the smooth, routine task it should be. Taking time to properly organise everything before your accountant starts work saves time, reduces fees, and ensures compliance deadlines are met comfortably.
These five essential checks help you streamline your filing process and avoid expensive penalties.
Check one: Bank reconciliations are complete
Bank reconciliations verify whether your accounting records align with your bank balances and are absolutely fundamental for creating accurate, robust year-end accounts.
Start reconciling all business accounts at least six weeks before year-end. This includes current accounts, savings accounts, credit cards, and any loan accounts.
Focus on clearing items that have been outstanding for more than three months first, as these usually indicate systematic recording errors.
Most reconciliation problems stem from:
- Card processing fees not recorded when sales are posted
- Direct debits that changed amounts without notice
- Bank charges appearing on statements but not in accounts
- Inter-account transfers recorded twice or as income
Once you have identified your unmatched transactions, review them individually (if you have no unmatched transactions, well done!).
If you find issues, first verify that payments were made to the correct suppliers and that income was posted to the corresponding customer accounts. Look for duplicate entries where the same transaction appears multiple times in your records.
Check two: Stock counts reflect actual inventory
Stock counts verify that your recorded inventory matches what’s on your shelves and in your warehouse. Schedule physical counts before year-end to allow time for investigating major discrepancies.
Any discrepancy between your records and reality directly affects your profit. Missing £10,000 of stock reduces your profit by £10,000. Finding extra stock you’d written off increases your taxable profit.
Be aware that HMRC requires stock to be valued at the lower of cost or net realisable value. In practical terms, this means:
- Items that won’t sell at full price need to be marked down to realistic values
- Seasonal stock left after Christmas may be worth less than you paid
- Damaged or obsolete items should reflect what you can actually get for them
- Technology that’s been superseded needs realistic valuations
Check three: Directors’ loans are documented
Directors’ loans track money flowing between directors and the company outside of salary, dividends, or legitimate business expenses.
Review every payment to directors that wasn’t salary, dividends, or expense reimbursement. This includes personal expenses paid by the company, cash withdrawals, and funds that directors have invested in the business.
Poor documentation creates two potential tax charges:
- Benefit-in-kind: Directors pay income tax when they owe over £10,000 at any point
- Section 455 tax: Companies pay extra corporation tax at 33.75% if loans aren’t repaid within nine months of year-end
Document the purpose of each transaction and establish formal repayment schedules for significant amounts. Many directors don’t realise that personal spending on company credit cards creates loan obligations.
Check four: VAT returns are current
Outstanding VAT returns create problems for year-end accounts because your accountant can’t finalise VAT control account reconciliations without knowing the exact amounts owed to or from HMRC.
If your VAT returns are behind schedule, your balance sheet will show incorrect VAT liability figures. This affects both your cash position and your reported liabilities.
Key issues with incomplete VAT returns:
- VAT control accounts can’t be properly reconciled
- Balance sheet shows estimated rather than actual VAT liabilities
- Input VAT claims might be missed, overstating your costs
- Auditors or accountants may query unexplained VAT balances
Complete all VAT returns before your accountant starts year-end work. This ensures clean VAT control accounts and accurate liability figures on your balance sheet.
Check five: Supporting documentation is organised
Gather all supporting documents your accountant will need before they start preparing your accounts. Missing paperwork delays the entire process and increases professional fees.
Essential documents to collect:
- Invoices for major purchases and capital expenditure
- Contracts for significant transactions or ongoing commitments
- Evidence for any unusual entries in your accounts
- Documentation for grants received during the year
- Insurance claim settlements and legal settlement payments
- Property completion statements and improvement receipts
- Purchase records for any assets sold (to calculate gains or losses)
Create a complete file containing all these documents before your accountant starts work. This allows them to work efficiently without interruptions and ensures nothing important gets overlooked.
Organised documentation also provides audit trails that HMRC may request during enquiries and supports any claims or reliefs included in your accounts.
Master your year-end accounts with Blue Shore
Nobody wants to be scrambling at the last minute when accounts are due. The difference between a smooth filing and a stressful one usually comes down to preparation – companies that start early and work systematically rarely face nasty surprises.
Think of it this way: every hour spent preparing now saves multiple hours of panic later. When your accountant has clean records and complete documentation, they can focus on adding value rather than chasing missing information.
These checks aren’t revolutionary, but they work. The businesses that consistently nail their year-end deadlines without drama follow this kind of methodical approach. They’ve learned that prevention beats cure every time.
At Blue Shore, we’ve seen too many companies turn year-end accounts into an annual crisis when it could be routine administration. If you’d like help establishing systems that make next year’s accounts preparation straightforward, get in touch – we’re here to make compliance work for your business, not against it.
