As a new limited company, getting to know the accounting side of your business can offer many benefits to any director. Whether you choose to source your accounting in-house or contract it out, being financially aware allows you an in-depth connection to your business which assists in projecting it forward with more significant financial planning.

Account referencing may be a term you have come across during your online company registration or when dealing with your accountant, but are you fully aware of what it is and how it matters to your company? Let us help you discover the impact it may or may not have on your limited company.

What Is an Account Referencing Date?

Essentially, the account reference date (ARD) is the end of a limited company’s financial year. It represents when a business must make its annual financial activity accountable. It begins on the date the company was incorporated and ends on the account referencing date.

This date usually falls on the anniversary of the last calendar day of the month they incorporated with Companies House. For example, if you incorporate your company on the 26th of July 2022, your account referencing date is the 31st of July, and your annual account reference date will always fall on this date each year.

Why Do You Need an Account Referencing Date?

An ARD provides a limited company with the end of its financial year, in which it must carry out the following.

  • Prepare full statutory annual accounts
  • Send a copy of this to every shareholder attached to the company
  • Provide a copy for Companies House
  • As part of your tax returns, they will also be required at HMRC

Whilst this feels like a rather technical accounting procedure, in its simplest form, it offers a document which informs the relevant individuals of your financial activity throughout your year. As a limited company director, even though you may have little involvement in the accounts department of your business, understanding when this happens and how you can be of assistance can ensure the task is carried out efficiently.

Why Would You Need to Change an Account Reference Date?

Whilst you may believe that this date is detrimental and uncompromising, as a company, you can change the date of your ARD to benefit your business.

Shortening your financial year. There could be an array of reasons why you may wish to shorten your financial year. Perhaps the date doesn’t suit the nature of your business if it is seasonal. Maybe you have a new product which has recently launched and would like to free up capital to sustain the business whilst you provide resources and investment into marketing and manufacturing said product.

You can shorten your financial year as often and by as much as you wish so long as it is done before the deadline for delivering the annual accounts for your current or immediately previous financial year.

Lengthening your financial year. Adding time to your financial year also comes with benefits. However, unlike shortening, you can only extend your financial year once every five years, but you can extend it up to 18 months (or longer if the company is in administration).

Other reasons could include aligning the ARD with a parent company’s ARD or if Companies House offers exceptional grounds for permission based on individual circumstances.

How to Choose a New Account Referencing Date

Choosing a new ARD will depend on the needs of your business alone. Many companies prefer to have their ARD aligned with HMRC’s end of the tax year. However, you may wish to have it throughout quieter months to provide the account manager/s with the best resources and assistance available.

Discussing the change with your accounts department, shareholders, and other managing directors will provide a preferred date for your company.

Changing Your Account Reference Date with Us

If you would like to change your ARD to suit your business but would like to do so correctly and efficiently, as part of our Ad Hoc services, we can provide an expert who can change your ARD within the confines of HMRC constraints and regulations. Whether you are new as a director or a limited company, at Company Registrations Online, we can assist with various services to offer the most effective organisation and planning for your business.

For more information on any of our services or if you have any further questions, feel free to enquire online. Our fully trained staff are always happy to help.