Bookkeeping for Your Company's Tax Return

Every business that registers with Companies House is required to file a Company Tax Return every fiscal year in order to pay Corporation Tax on its profits.

Some business owners choose to handle their tax returns in-house, either alone or with the assistance of an employee, while others prefer to leave it in the capable hands of a qualified accountant. Whatever path you take, it's critical that your bookkeeping is precise and up to date so that your tax return can be filed accurately.

Bad bookkeeping habits result in errors and omissions, which can lead to HM Revenue & Customs penalties (HMRC). The moral of the Storey is to ensure that your bookkeeping is up to date so that you can complete your Company Tax Return on time with maximum precision and lowest worry.

In this post, we'll go through the good bookkeeping service you'll need to ensure your tax return processes smoothly every year, regardless of who files it on your behalf.

Put together a comprehensive to-do list.

To file your Company Tax Return and pay your Corporation Tax, you must complete and submit a CT600 form. The CT600 is notoriously complicated in places, and there is a list of severe criteria that must be met for compliance, including (but not limited to):

• Income and turnover
• Profit and loss for the fiscal year
• Reconciliation of taxation
• Deductions from taxes
• Any tax breaks you're claiming

Keeping a comprehensive checklist of everything you need to cover ensures that you will be able to check all the relevant boxes in your bookkeeping throughout the year. It goes a long way toward ensuring you have all of the information you need when it comes time to file your return. If you do not comply, you may face a fine from HMRC.

Don't worry, this isn't something you're required to recite off the top of your head every time a deadline approaches. HMRC has actually put together a full CT600 guide to help you through the procedure. It explains what you must do to comply, as well as how to perform some of the more sophisticated computations. Alternatively, you may delegate the task to a skilled accountant - but more on that later.

Understand (and complete) your statutory accounts

Your statutory accounts are the accounts you prepare at the end of the fiscal year. These must be sent to HMRC as part of your Company Tax Return, so you must ensure that all required information is available and correct - this begins with proper bookkeeping.

According to HMRC guidelines, your statutory accounts must include:

• A balance sheet details the value of "everything the corporation owns, owes, and is owed" on the last day of the fiscal year.
• Profit and loss account - this accounts for your sales, operating costs, and profit or loss for the fiscal year.
• Unless you are a 'micro-entity' (a firm with a turnover of £632,000 or less, 10 workers or fewer, or £316,000 or less on its balance sheet), you must provide a director's report.
• Any extra notes regarding your accounts that may be relevant.

Good bookkeeping techniques throughout the year will make compiling your statutory accounts much easier than if you have to scramble them together at the last minute.

Invest in cloud-based bookkeeping software.

Bookkeeping, like anything else, requires the correct tools, skills, and resources.

Investing in solid cloud-based accounting software is one of the most effective things you can do to improve your bookkeeping and ease the Company Tax Return process. This will enable you to take use of features and programmes that simplify and automate many of the operations that are prone to error.

Here are just a handful of the numerous advantages of employing cloud-based bookkeeping software:

• You may access your accounts at any time and from any location that has an internet connection, allowing you to complete your bookkeeping on the go.
• Integrate with programmes such as PayPal, as well as your personal and business bank accounts.
• Use multi-user access to allow multiple people to work on your accounts at the same time.
• You can automate procedures (such as invoices and payroll) and set up automated reminders.
• Data will be stored on a secure cloud server and backed up on a regular basis.

Enlist the assistance of a professional bookkeeper.

Great bookkeeping is no easy task, especially for business owners who frequently have numerous plates spinning at once. That's why, if possible, we recommend hiring an expert bookkeeper to save you time. They will also have a strong idea of what the data should look like, which will help to limit the chance of errors even further.

A professional bookkeeper understands the accounting sector and can help you use your bookkeeping software. Working with a bookkeeper is another approach to protect yourself from stress headaches and HMRC problems.

Employ the services of a competent accountant.

As previously said, the Company Tax Return process can be somewhat difficult. For example, you must ensure that all information in your CT600 is reported in Inline extensible Business Reporting Language (iXBRL).

Understanding and reporting your information can be time-consuming and frustrating, which is why we always recommend hiring an accountant to assist you. An accountant can also assist in other areas. For example, providing a budgeting approach that ensures you have a cash cushion to pay your Corporation Tax obligation and assisting you in claiming all permissible costs.

If you don't want to engage two distinct services for bookkeeping and accounting, look for an accountant who can do both. That way, when it comes to filing your Company Tax Return, you'll have complete piece of mind.