Start with the deadline, the framework and the shape of the accounts

Before you open a spreadsheet, decide three things: when the accounts are due, which accounting framework applies, and what you actually intend to file. For a UK company, the accounting reference date drives everything. Companies House expects your first accounts within 21 months of incorporation, and nine months after each subsequent year end. HMRC wants the corporation tax return within twelve months of the period end, and the accounts that accompany it.

Most small companies prepare accounts under FRS 102 Section 1A (the small entities regime). If you qualify as a micro-entity, FRS 105 is simpler still, though it strips out some options such as revaluation and certain deferred tax adjustments. Choosing the wrong framework after you have drafted the numbers is painful, so settle it early with whoever signs the accounts.

It also helps to know the end product. A small company typically files a balance sheet, notes and the accountants' or directors' statements, but not the profit and loss account. That does not mean the profit and loss account is optional internally — your tax computation needs it, and so does anyone lending to you.

Build a trial balance you trust

The trial balance is the spine of the whole exercise. Pull it from your bookkeeping software at the year-end date and check the obvious first: debits equal credits, the bank balance agrees to the statement, and no transactions have drifted into the following period.

• Cut-off: make sure sales invoices raised in the first week of the new year relate to work done after the year end, and that supplier bills for pre-year-end costs are accrued.
• Bank and credit cards: reconcile every account, not just the main one. Personal spending put through a director's loan account is a common source of errors.
• Payroll: agree gross pay, PAYE and pension control accounts to the final RTI submission and pension provider statements.
• VAT: agree the VAT control account to your last return of the period and clear any old balances sitting there.
• Stock and work in progress: if you hold either, a physical count or a considered estimate dated at the year end is essential.

A trial balance that balances but disagrees with reality is worse than one that visibly does not. Spend the time now, when adjustments are easy to trace.

Prepare supporting schedules and reconciliations

Auditors and accountants are not the only audience for these — they protect you if HMRC asks questions eighteen months later. Aim for a schedule behind every material balance sheet figure.

• Fixed assets: a register showing additions, disposals and depreciation for each class, with the policy stated.
• Debtors and creditors: aged lists, plus a note of anything doubtful and your basis for the provision.
• Director's loan account: a running statement of advances and repayments, with the interest and benefit-in-kind position considered. This is one of the most scrutinised areas in small company accounts.
• Accruals and prepayments: a simple list with dates, so each item reverses cleanly next year.
• Leases and loans: agreements showing the split between amounts due within and after one year.

Keep these schedules in the same folder as the final accounts. Future you will be grateful.

Gather the company and director information

It sounds trivial until you are hunting for it at 11pm. Have to hand the exact registered name and number, the registered office, the accounting reference date, and the names of directors who served during the period. Confirm the share capital — number and class of shares, nominal value, and amounts paid up — against the statutory register, not last year's accounts.

Also collect any changes in the period: share issues or transfers, changes of director, changes of accounting policy, and any dividends declared. Dividend paperwork matters, because unlawful or undocumented distributions can cause real problems later. If the company has taken the audit exemption, note the qualifying conditions; if it has not, the accounts need an audit report.

Draft, review and sense-check the figures

Once the trial balance is agreed and the schedules are complete, draft the accounts and then step back. Compare the current year with the prior year line by line. A turnover jump of 40%, a suspiciously round debtor, or a creditor balance that has not moved in three years all deserve an explanation.

Check the small print too: the balance sheet date must match the period covered, the accounting policies must describe what you actually did, and any statement about preparing accounts under the small companies regime must be accurate. Where judgement is involved — depreciation rates, provisions, stock valuation — write a short note explaining your reasoning. That is what supports a true and fair view, which is the standard the law asks of you, not perfection.

Finally, remember the accounts and the tax return are related but not identical documents. Timing differences, disallowable expenses and capital allowances all sit between them, so reconcile the two before anything is filed. Give yourself a week of buffer before the deadline, and the whole process becomes an annual routine rather than an annual scramble.