What Should You Do Before Your Accountant Prepares Your Year-End Accounts?

For many business owners, the end of the financial year arrives faster than expected.

Receipts are gathered, bank statements are downloaded and bookkeeping that has been ignored for several months suddenly becomes urgent.

Leaving everything until the filing deadline can delay the accounts, increase accountancy work and make it harder to identify missing expenses or incorrect transactions.

Preparing your records properly gives your accountant a more reliable starting point. It can also make the accounts meeting more useful by allowing more time to discuss profit, cash flow, tax and future plans.

Whether you are a sole trader or a limited company director, a little preparation can make a significant difference.

The short answer

Before your accountant prepares your year-end accounts, you should:

• Complete your bookkeeping.
• Reconcile every bank account.
• Gather missing invoices and receipts.
• Review unpaid customer invoices.
• Confirm supplier balances.
• Provide loan and finance statements.
• Identify major asset purchases.
• Review payroll and pension records.
• Record mileage and personal expenses.
• Check Director’s Loan transactions.
• Confirm stock and work in progress.
• Explain major business changes.

The more complete your records are, the fewer questions your accountant should need to raise.

However, do not wait until after the year has ended to discuss every tax-planning decision. Some actions must take place before the accounting date to affect that year’s position.

1. Complete your bookkeeping

Your accountant can only prepare reliable accounts from accurate financial records.

Before sending the information, check that:

• All sales have been recorded.
• Purchase invoices are included.
• Expenses are complete.
• Credit notes are entered.
• Transfers are matched correctly.
• Duplicate entries are removed.
• Personal spending is identified.
• Unexplained transactions are reviewed.

Do not assume that every transaction imported through a bank feed has been treated correctly.

Bank feeds can save time, but each transaction still needs to be categorised, matched and reconciled.

Regular bookkeeping throughout the year is generally more efficient than trying to reconstruct an entire accounting period shortly before the accounts are due.

2. Reconcile every financial account

The balance shown in your accounting software should agree with the actual statement balance.

Check:

• Business current accounts.
• Savings accounts.
• Credit cards.
• Loan accounts.
• PayPal.
• Stripe.
• Other payment platforms.
• Petty cash.

Common reconciliation problems include:

• Missing bank charges.
• Duplicate payments.
• Transfers treated as income.
• Customer receipts allocated incorrectly.
• Personal transactions included as expenses.
• Payment-platform fees omitted.

Provide complete statements covering the accounting period.

Your accountant may also request statements from shortly after the year end. These can help identify payments relating to outstanding invoices, liabilities or year-end balances.

Using suitable accounting software can make regular reconciliation easier, but the underlying records still need to be checked.

3. Gather missing receipts and invoices

Missing paperwork is one of the most common reasons accountants need to raise additional questions.

Collect supporting evidence for:

• Purchases.
• Equipment.
• Software.
• Insurance.
• Professional fees.
• Telephone costs.
• Advertising.
• Travel.
• Repairs.
• Training.
• Subscriptions.

Where an invoice is missing:

• Search your email account.
• Check the supplier portal.
• Review online order histories.
• Request a duplicate.
• Check payment-platform records.
• Add a note explaining the purchase.

A bank statement shows that money was paid, but it may not explain what was purchased, whether it was for the business or whether VAT was charged.

Merranti’s guide to what records businesses need to keep for HMRC provides more information about supporting business documents.

4. Review outstanding customer invoices

Review your aged debtors report and identify which customers still owe money.

Ask:

• Have all completed jobs been invoiced?
• Have customer payments been allocated?
• Are any invoices disputed?
• Should overdue balances be chased?
• Are any debts unlikely to be collected?

An unpaid invoice may still be included in the business’s sales and profit even though the money has not reached the bank.

Where a debt is genuinely unlikely to be recovered, tell your accountant. It may require different accounting and tax treatment.

Do not simply delete old invoices or issue retrospective credit notes without understanding why the balance remains outstanding.

This review can also highlight wider cash-flow problems before they become more serious.

5. Confirm what the business owes

Your accountant also needs an accurate record of the business’s liabilities.

Review:

• Supplier balances.
• Outstanding bills.
• Credit cards.
• Bank loans.
• Hire-purchase agreements.
• Finance leases.
• VAT.
• PAYE.
• Pension contributions.
• Employee expenses.
• Amounts owed to directors.

Provide year-end statements for loans and finance agreements.

Loan payments often contain both capital and interest. They should not automatically be recorded as one general expense.

You should also notify your accountant about invoices received after the year end that relate to work, services or goods supplied before the accounting date.

Having an accurate picture of what the company owes is essential when reviewing its actual financial position.

6. Identify major purchases and disposals

Tell your accountant about significant purchases made during the year.

Examples include:

• Vehicles.
• Computers.
• Machinery.
• Tools.
• Office furniture.
• Specialist equipment.
• Property improvements.
• Website development.

These items may need to be recorded as assets rather than ordinary day-to-day expenses.

Provide:

• The invoice.
• Purchase date.
• Description.
• Cost.
• Finance agreement.
• Details of private use.
• Information about replaced equipment.

Also identify assets that were sold, scrapped, traded in, lost or no longer used.

This allows your accountant to update the fixed-asset records and consider the appropriate accounting and tax treatment.

7. Check stock and work in progress

Businesses holding stock should complete an appropriate year-end stock count.

Stock may include:

• Goods for resale.
• Raw materials.
• Components.
• Packaging.
• Finished products.
• Part-completed items.

Record quantities, costs and any damaged, obsolete or slow-moving items.

Service and project-based businesses may also need to identify work in progress, including:

• Work started but not completed.
• Completed work not yet invoiced.
• Projects invoiced in advance.
• Partially delivered contracts.

Stock and work in progress can significantly affect reported profit, so the figures should be supported by a reasonable calculation rather than a rough estimate.

If a stock figure looks significantly different from the previous year, be prepared to explain what has changed.

8. Review Director’s Loan transactions

If you operate through a limited company, review all money moving between you and the company.

This may include:

• Money you lent to the company.
• Company expenses paid personally.
• Personal expenses paid by the company.
• Cash withdrawn.
• Loan repayments.
• Salary.
• Dividends.
• Expense reimbursements.

Every payment should have a clear accounting explanation.

Do not assume that each transfer from the company can automatically be treated as a dividend. Dividends require sufficient distributable profits and appropriate supporting records.

An overdrawn Director’s Loan Account can create additional tax consequences, so it should be identified before the accounts are finalised.

This is also why directors’ expenses should be recorded clearly throughout the year rather than reconstructed after the year end.

9. Gather payroll and pension information

If the business employs staff, confirm that payroll records are complete and agree with the bookkeeping.

Review:

• Gross pay.
• PAYE.
• National Insurance.
• Pension contributions.
• Bonuses.
• New employees.
• Leavers.
• Holiday pay.
• Employee expenses.
• Amounts unpaid at year-end.

Tell your accountant if directors or employees received benefits such as:

• Company cars.
• Private medical insurance.
• Interest-free loans.
• Personal use of company assets.
• Other non-cash benefits.

Differences between payroll reports, bank payments and HMRC submissions should be investigated rather than ignored.

If there has been a large change in payroll costs during the year, explain why. Recruitment, bonuses, redundancies or changes in director remuneration may all affect the figures.

10. Include personally paid business expenses

Business owners frequently pay company costs using personal accounts or cards.

Examples include:

• Software.
• Mileage.
• Travel.
• Equipment.
• Professional subscriptions.
• Advertising.
• Office costs.

Provide the invoice, payment evidence and business purpose.

For a limited company, these costs may need to be credited to the Director’s Loan Account if they have not already been reimbursed.

Also check that claims have been included for areas such as:

• Business mileage.
• Homeworking.
• Telephone use.
• Professional subscriptions.
• Employee expenses.

Missing legitimate expenses could result in the business reporting more taxable profit than necessary.

However, an expense is not allowable merely because the company paid it. Private costs must still be identified and treated correctly.

11. Tell your accountant about major changes

Accounts are not prepared using bank transactions alone.

Tell your accountant if the business:

• Started or stopped trading.
• Opened or closed premises.
• Recruited employees.
• Lost a major customer.
• Signed a significant contract.
• Received new funding.
• Bought another business.
• Changed shareholders.
• Issued shares.
• Took out borrowing.
• Entered a legal dispute.
• Experienced fraud or theft.
• Plans to sell or close.

These events may affect accounting entries, tax treatment, disclosures and future planning.

Your accountant cannot advise on information they have not received.

A significant change in the business may also explain movements in profit, cash flow, borrowing or other year-end figures that would otherwise appear unusual.

Ask questions before the accounts are finalised

The year-end meeting should not be limited to confirming the tax bill.

Useful questions include:

• Why did profit change?
• Are margins improving?
• Which costs increased?
• Are customers paying more slowly?
• Is cash flow strong enough?
• Can the business afford recruitment?
• Are prices still appropriate?
• What tax should be reserved?
• Is the director’s remuneration suitable?
• What should change next year?

Regular management accounts can help answer these questions throughout the year rather than waiting for the annual accounts.

Year-end figures are most useful when they help you understand what happened and make better decisions about what happens next.

Common mistakes

Business owners commonly:

• Leave records until the deadline.
• Send incomplete bank statements.
• Forget credit cards or payment platforms.
• Miss personally paid expenses.
• Ignore old customer balances.
• Omit loan statements.
• Leave director withdrawals unexplained.
• Provide no stock figures.
• Forget asset purchases.
• Ask for planning advice after year-end.

Most of these issues are easier to resolve when identified early.

Waiting until the accounts are nearly due can turn a relatively simple question into a time-sensitive problem.

Your practical year-end checklist

Before sending your information:

• Complete the bookkeeping.
• Reconcile all accounts.
• Upload missing documents.
• Review customer debts.
• Confirm supplier balances.
• Provide loan statements.
• Identify asset transactions.
• Complete the stock count.
• Review payroll records.
• Record personal expenses.
• Check director transactions.
• Explain major changes.
• Prepare your questions.
• Confirm filing deadlines.

The objective is to give your accountant a complete and accurate set of information rather than simply sending everything available and hoping any gaps can be identified later.

Frequently Asked Questions

When should I start preparing?

Records should ideally be maintained throughout the year.

Complete the final review as soon as possible after the accounting period ends rather than waiting until the filing deadline approaches.

The earlier your accountant receives complete information, the more time there is to resolve queries properly.

What documents will my accountant need?

This commonly includes:

• Bookkeeping records.
• Bank statements.
• Invoices and receipts.
• Loan statements.
• Payroll reports.
• VAT records.
• Asset invoices.
• Stock information.

The exact requirements depend on the business.

Can I send digital records?

Yes.

Clear digital records are often easier to organise, process and retain than paper documents.

Cloud accounting software, digital receipt storage and organised document folders can make the year-end process significantly easier.

What if my bookkeeping is incomplete?

Tell your accountant promptly.

They may be able to help complete or reconstruct the records, although additional work and fees may be required.

Do not hide missing information or make assumptions simply to make the records balance.

Is year-end the best time for tax planning?

It is a useful time to review the results and plan for the future.

However, some actions must be completed before the accounting year ends. Speak to your accountant early if you are considering dividends, pensions, major purchases or other tax-sensitive decisions.

Should I wait for my accountant to ask for missing information?

Ideally, no.

Reviewing the records yourself before sending them can identify missing invoices, unexplained payments and other issues much earlier.

That gives your accountant more time to focus on preparing and explaining the accounts rather than repeatedly requesting basic information.

Final thoughts

Preparing for year-end accounts does not need to be stressful.

The process is generally smoother when the business:

• Maintains current bookkeeping.
• Reconciles accounts regularly.
• Retains supporting documents.
• Reviews debts and liabilities.
• Records director transactions.
• Identifies major changes.
• Raises questions early.

Complete records allow your accountant to spend less time searching for missing information and more time explaining the results and helping you plan.

At Merranti Accounting, we support businesses with bookkeeping, annual accounts, management information, tax planning and financial decision-making throughout the year.

This article provides general information and should not be treated as personalised accounting, tax or legal advice. The records required will depend on the business structure, activities and accounting arrangements.

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Written by Jenny Seaford ACPA

Jenny Seaford ACPA is a Senior Accountant at Merranti Accounting.

Jenny works with limited companies and business owners on their accounting and tax requirements, helping clients maintain accurate records and understand what information is needed to prepare reliable year-end accounts.

Her role includes reviewing bookkeeping, company expenditure, accounting records and year-end information so that financial statements are supported by the underlying business activity rather than simply being treated as a filing exercise.

For business owners, preparing complete information before the accounts are started can make the year-end process considerably smoother. It also gives more time to discuss what the results mean, identify issues and consider the financial priorities for the year ahead.

View Jenny Seaford on the Merranti team page or connect with Jenny on LinkedIn.