Year-end bookkeeping checklist for UK limited companies and sole traders

The year-end is when the whole year's bookkeeping gets tested. An accountant who receives clean, reconciled records can prepare accounts quickly and cheaply. One who receives a mess spends hours untangling it, and charges accordingly. A good year-end is not complicated, but it is a sequence, and the order matters. This checklist walks through it for limited companies and sole traders, with what to do, why it matters and what to hand to your accountant at the end.

When is your year-end?

A limited company chooses its accounting reference date, which sets its year-end, commonly 31 March or 31 December. Companies House accounts are due 9 months after it, Corporation Tax is payable 9 months and 1 day after it and the Corporation Tax return is due 12 months after. A sole trader's tax year ends on 5 April, though some use a different accounting date. Put the date in the diary at least a month ahead, and start the checklist as soon as the last transaction of the year is in. See our guide to limited company bookkeeping.

The checklist

1. Reconcile every bank and credit card account

Reconcile each account to the statement as at the year-end date. The closing balance in your books must equal the bank statement, after allowing for items in transit. Include savings accounts, credit cards, loans and payment platforms such as PayPal and Stripe. See how to reconcile a bank account.

2. Check that all income is recorded

Compare your sales invoices with your income records and bank receipts. Check you have recorded sales made late in the year, including cash sales and those through online platforms. Make sure any credit notes are entered.

3. Check that all expenses are recorded

Make sure every supplier invoice for the year is entered, including those received after the year-end that relate to goods or services delivered before it. Attach receipts for expenses, and chase any missing documents. Our receipt and expense capture helps with this.

4. Post accruals

An accrual is a cost you incurred in the year but have not yet been billed for, such as the final quarter's electricity or an accountant's fee for work done. Estimate it and post it so that the cost falls in the right year. Under the cash basis for sole traders this step does not apply.

5. Post prepayments

A prepayment is a cost you paid in the year that relates to the next year, such as an annual insurance premium or software subscription paid early. Spread it so that only the part relating to the year is expensed, and the rest is carried forward as an asset.

6. Review debtors and bad debts

Review the aged debtors list. For invoices that are unlikely to be paid, write them off as bad debts, which are an allowable expense, and consider VAT bad debt relief. Make sure customer receipts are matched to the right invoices. See late-paying customers for recovery.

7. Review creditors

Check the aged creditors list. Make sure you have recorded all supplier bills, and that nothing paid appears still outstanding.

8. Count and value stock

If you hold stock, count it as at the year-end and value it at the lower of cost and net realisable value. Post the closing stock figure, which reduces your cost of sales for the year.

9. Update the fixed asset register

Record new equipment, vehicles and machinery bought in the year, and remove anything sold or scrapped. Your accountant uses this to calculate depreciation for the accounts and capital allowances for tax, including the Annual Investment Allowance on most plant and equipment.

10. Check the director's loan account

For limited companies, review every entry in the director's loan account and confirm the closing balance. If it is overdrawn, decide how to clear it before the section 455 deadline of 9 months and 1 day after the year-end. See director's loan account explained.

11. Reconcile payroll

Check that payroll liabilities for PAYE, National Insurance and pensions agree with payroll reports and HMRC records, and that all payments have been made. See payroll bookkeeping for small employers.

12. Reconcile VAT

If you are VAT registered, make sure the VAT control account agrees with your submitted returns, with the balance equal to the VAT due or reclaimable at the year-end. Review VAT codes for errors. See our VAT guide.

13. Clear suspense and uncategorised accounts

Any balance in suspense, ask-my-accountant or uncategorised accounts means something is unresolved. Clear it by identifying each item. A tidy chart of accounts with no unexplained balances is a good sign.

14. Review loans and finance

Check loan, hire purchase and finance lease balances against lender statements. Split repayments between capital and interest, and record the accrued interest.

15. Review the profit and loss and balance sheet

Run the reports and review them for anything unexpected. Compare with last year and with budget. Look at the largest expense categories for coding errors, and check that the balance sheet balances sensibly. A quick review catches errors that accountants would otherwise query.

16. Lock the period

If your software allows it, lock the year so no one can change transactions after you have reviewed them. Any further changes should be made as formal adjustments agreed with your accountant.

The hand-over pack for your accountant

Give your accountant a single, organised pack. A good one includes:

• Trial balance and year-end profit and loss and balance sheet
• Bank reconciliations for every account, with statements
• Aged debtors and creditors lists
• Stock valuation
• Fixed asset register and new purchase invoices
• Director's loan account schedule
• Payroll year-end reports and pension reports
• VAT returns and the VAT reconciliation
• Loan and finance agreements and statements
• A list of queries or unusual transactions

Our year-end bookkeeping service prepares this pack, and if you also want accounts and tax filed, our parent firm Accotax can do that.

Common year-end mistakes

• Starting too late
• Leaving reconciliations until the end
• Forgetting accruals and prepayments
• Not counting stock
• Leaving the director's loan account overdrawn
• Ignoring unpaid invoices that should be written off
• Sending the accountant a pile of unsorted receipts

Starting early makes the year-end easy

The simplest way to shorten the year-end is to do half of it during the year. Reconcile every month, post accruals and prepayments each quarter, count stock at least twice a year and review the director's loan account monthly. Then the year-end becomes a final confirmation, not a scramble. If you only do one thing differently this year, schedule a one-hour review three months before the year-end to look at the balance sheet, the aged debtors list and any unusual balances. Problems found with three months to spare can be fixed before they affect the accounts.

Frequently asked questions

When should I start my year-end work?

As soon as the last transaction of the year is entered, and reconcile throughout the year so the final step is short.

What is the difference between an accrual and a prepayment?

An accrual is a cost incurred but not yet billed. A prepayment is a cost paid in advance for a later period.

Do sole traders need to do accruals?

Not on the cash basis. On accruals accounting, yes.

What happens if I miss the Companies House deadline?

Automatic penalties apply, and they escalate with delay.

Can you prepare my year-end?

Yes. We reconcile, adjust and hand over a clean pack. Get an instant quote.