Why Year-End Matters
The end of the tax year (5 April for sole traders, or your chosen year-end date for limited companies) is the deadline for organising your financial records. Everything that happened in the year needs to be accounted for, reconciled, and ready for your tax return or annual accounts. Doing this properly ensures you pay the right amount of tax — not too much, not too little.
Before Year-End
Review your expenses and ensure everything claimable has been recorded. Make any tax-efficient purchases before the year-end date — equipment, software, or stock that you need anyway. Check your income against the VAT threshold and higher-rate tax thresholds. Discuss with your accountant whether any year-end actions (pension contributions, dividend declarations, capital purchases) would reduce your tax bill.
The Reconciliation Checklist
Reconcile all bank accounts — every transaction should be accounted for and categorised. Download and file all Amazon settlement reports for the year. Ensure all supplier invoices have been recorded. Check that your stock valuation is accurate (the value of unsold inventory at year-end affects your profit calculation). Verify all expense claims have receipts or documentation.
Stock Valuation
Your closing stock value directly affects your reported profit. Stock is valued at the lower of cost or net realisable value. This means stock you bought for ten pounds that is now worth five should be valued at five. Accurate stock valuation requires knowing what you have (Amazon inventory reports help) and what it is worth (consider slow-moving or unsellable items). Overvaluing stock inflates profit and increases your tax bill unnecessarily.
After Year-End
Provide your accountant with all necessary records promptly. The sooner they have your information, the sooner your return or accounts are filed and the sooner you know your tax liability. Set aside funds for your tax payment based on your accountant's calculation. File and pay on time — late filing and late payment both incur penalties that are entirely avoidable with basic planning.