Year-end checklist: how your bookkeeper and accountant work together

Year end is when a business's day-to-day bookkeeping is turned into annual accounts and tax returns. For most small businesses, two people share that work: a bookkeeper who gets the records complete and reconciled, and an accountant who turns them into statutory accounts and computes the tax. When the handover between them is clean, year end is quicker, cheaper and far less stressful. This guide explains the division of labour, gives a detailed year-end checklist, and sets out the deadlines for sole traders and limited companies.

Who does what: bookkeeper and accountant

The two roles overlap, and in some firms one person does both, but it helps to think of year end as a relay. The bookkeeper runs the first leg: recording and checking every transaction and producing a reliable Trial Balance. The accountant runs the second: reviewing that Trial Balance, making final adjustments, preparing the accounts and tax computations, and submitting them.

Verdi Bookkeeping is a bookkeeper, not a firm of chartered accountants. We prepare accounts to Trial Balance with all schedules, ready for your accountant to finalise and submit. If you do not yet have an accountant, we regularly recommend Goldwins Ltd.

The year-end checklist, item by item

Each of the areas below should be completed, reconciled and supported by a schedule before the books are handed over. Where your bookkeeper has kept things up to date through the year, most of these are confirmations rather than projects.

Bank and credit card reconciliations

Every bank, savings, credit card and payment-platform account should be reconciled to the statement balance at the year-end date. Unpresented cheques and outstanding lodgements should be listed, and there should be no unexplained items in suspense.

Debtors (receivables)

Produce an aged debtors list at the year end and agree it to the sales ledger control account. Review old balances: anything unlikely to be paid should be flagged so the accountant can decide on a bad debt write-off or provision.

Creditors (payables)

Likewise, produce an aged creditors list and agree it to the purchase ledger control account. Check supplier statements for invoices that have not been entered, and confirm that credit notes have been matched.

Accruals and prepayments

Accounts are prepared on the accruals basis, so costs belong in the period they relate to, not the period they are paid. An accrual is a cost incurred but not yet invoiced, such as the final quarter's electricity or an accountancy fee for the year. A prepayment is a cost paid in advance, such as annual insurance paid in January when the year ends in March: nine months of that premium belongs to next year. List each item with the calculation.

Stock and work in progress

If you hold stock, count it as close to the year end as possible, value it at the lower of cost and net realisable value, and keep the count sheets. For service businesses, list unbilled work in progress. Check cut-off: goods received before the year end should have their invoice recorded in the same year.

Fixed assets register

Update the register with additions and disposals, attaching purchase invoices, and reconcile its totals to the fixed asset accounts in the ledger. Distinguish capital items from repairs; this matters for capital allowances, which the accountant will calculate.

VAT control account

The VAT control account balance at the year end should agree to the liability on the VAT return covering that date, adjusted for any part-period. Unexplained differences usually point to manual journals or transactions posted after a return was submitted.

Payroll control accounts

PAYE and National Insurance owed to HMRC should agree to the amount due for month 12, net wages control should be nil once wages are paid, and pension contributions owed should agree to the provider's schedule. Our payroll and PAYE guide covers the related payroll year-end tasks.

Directors' loan account

For limited companies, the directors' loan account records money the director has taken out of, or lent to, the company other than salary and dividends. Every entry should be explained. An overdrawn balance at the year end has tax consequences, including a potential charge on the company if it is not repaid within nine months and one day of the year end, and possibly a benefit in kind. Flag it early so your accountant can advise.

Petty cash

Count the cash tin at the year end and agree it to the petty cash account, with vouchers for every payment.

The Trial Balance explained

A Trial Balance is a list of every account in the nominal ledger with its closing balance, shown as either a debit or a credit. Because double-entry bookkeeping records every transaction twice, the total debits must equal the total credits. A Trial Balance that balances does not prove the books are right, since an item posted to the wrong account still balances, but one that does not balance proves something is wrong.

Here is a simplified example for a small limited company:

On its own, the Trial Balance is just numbers. What makes it useful to an accountant are the schedules behind it: the bank reconciliations, aged debtors and creditors, accruals and prepayments workings, fixed asset register, VAT and payroll reconciliations and the directors' loan account analysis. Together, they let the accountant check each balance quickly instead of rebuilding it.

Key deadlines: sole traders vs limited companies

The year-end timetable depends on your business structure. The main deadlines are:

See GOV.UK for Self Assessment deadlines and filing company accounts and tax returns. Missing a Self Assessment deadline brings an initial £100 penalty, and Companies House charges automatic penalties for late accounts. Corporation Tax is charged at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between.

A realistic year-end timetable

Working back from the deadlines, a comfortable timetable for a limited company might look like this:

1. Before the year end. Bring bookkeeping up to date, chase old debts, plan any stock count and ask your accountant about timing of significant purchases.
2. Within one month. Complete bank reconciliations, the final VAT return and payroll year-end tasks; collect supplier statements.
3. Within two to three months. Your bookkeeper posts accruals, prepayments and depreciation, completes the schedules and hands over the Trial Balance.
4. Accountant's review. The accountant raises queries, agrees adjustments with you and prepares draft accounts and tax computations.
5. Approval and filing. You review and approve the accounts; the accountant files with Companies House and HMRC well before the deadlines, and you plan for the tax payment.

For sole traders, the same steps apply after 5 April, and finishing by the summer gives you time to plan for the January payment rather than discover it.

How tidy records reduce your accountancy fees

Accountants generally price year-end work according to how long it will take. Time spent reconstructing bank transactions, asking what a payment was for or rebuilding a fixed asset register is time you pay for, often at a higher rate than bookkeeping. Handing over a balanced Trial Balance with clear schedules lets your accountant spend their time where their expertise adds value: reviewing, advising and planning.

• Books fully reconciled to the year-end date, with nothing left in suspense.
• Aged debtors and creditors lists agreed to the ledger.
• Accruals, prepayments and stock schedules with workings.
• Updated fixed asset register with invoices for additions.
• VAT and payroll control accounts reconciled to returns.
• Directors' loan account analysed and explained.
• Copies of loan agreements, leases, HMRC letters and any unusual transactions.
• A short covering note listing anything you are unsure about.

Good year-end preparation starts with good habits during the year. Our article on bookkeeping habits for small businesses sets out simple weekly and monthly routines, and our guide on how long to keep business records explains what to archive once the year is closed. Verdi Bookkeeping, in London NW1, prepares books to Trial Balance for sole traders, partnerships and limited companies, working alongside each client's accountant.

Frequently asked questions