Read our top tips for managing this important paperwork period – stress-free – as the prepared for the end of the tax year draws to a close.
There is still plenty of time to organize your books before the current prepared for the end of the tax year ends on 10th April 2022.
Is year-end important to your business and how does it affect it?
In the tax (or financial) year that runs until 10th April 2022, new government taxation often goes into effect following the March budget announcement.
Taking a step back and taking stock of your finances from the previous year will help you better prepare for the upcoming 12-month period. In the current climate, with Covid-19 changing how and where employees work, and the need to optimize home working, this is especially relevant.
Here are ten tips that will help you ensure you’re covering everything you need for your year-end review.
1. Ensure your accounts are up to date
It is not only a legal requirement to report your balance sheet accurately and on time, but it is also vital to optimize your year-end accounts. Make sure you reconcile all of your pension contributions, sales invoices, expenses, and employee salaries with recorded transactions.
Dividends should only be paid from profit earned, and they should be issued after corporation tax has been computed.
2. Investing time is money
The list below contains a reoccurring theme – time is literally money. There are penalties for not filing any legally required information, and you will eventually have to pay them.
Consider your options early on, decide if you’re going to go it alone or hire an expert – but don’t procrastinate and put things off.
3. Choosing the right bookkeeper or accountant for your industry
Having an accountant who understands, or ideally is an expert in, the costs, benefits and tax reliefs specific to your industry will help you get the most out of your year-end review.
4. Cash balances should be protected
If possible, hold off on paying suppliers or invoices until the very last minute during the year-end period. A higher cash balance will be seen positively by credit agencies. Additionally, make sure all monies owing are gathered and chased up to ensure your cash reserves remain strong.
5. Expenses and bonuses for employees
To avoid having a backlog of outstanding payments going into the next financial year, make sure that all employee bonuses and expenses are paid prior to year end. As a result, your profit and dividends for the following year will be impacted because you will have to account for them, along with that year’s bonuses.
During this process, organization and timeliness are your friends!
6. Don’t forget to thank your existing customers
It is the perfect opportunity to engage with your existing clients at the end of the year. Provide a summary of your business highlights and thank your clients for their business. Take advantage of this opportunity to cross-sell by highlighting your specialties.
You can organize your contact database and send professional-looking emails with an eCRM.
Your clients can be segmented by a variety of factors, such as their interests, where the lead originated, or their demographics or geographic characteristics. You can automatically insert clients’ names into email greetings and measure subsequent click-through rates (CTRs) on your website.
Your clients will be more engaged if your message is more tailored to them.
Other than that, just give them a call or write a letter!
7. Prepare the budget for the next financial year
In order to set budgets for the upcoming year, you should have enough data depending on how long your company has been operating.
By looking at your previous year’s balance sheet, you can identify high and low seasons, see how campaigns performed, and compare investment against outcomes.
When analyzing their previous year’s financials, a chocolate maker would soon notice that revenue is higher in the summer than it is in the winter.
Brands that sell entertainment items, for example, might see sales spikes at weekends when customers have more free time to browse. Therefore, they may choose to increase their advertising budget during these times so as to maximize exposure.
8. Check that accounting software is GDPR-compliant
It may be useful to review your software and also take the opportunity to ensure that your data remains GDPR compliant if you are not using an accountant and doing your year-end accounts yourself.
Many of the tasks associated with year-end reporting can be automated using software, such as pulling in in-goings and outgoings, calculating tax, and making the whole process less stressful.
Mismanagement of GDPR can also lead to unnecessary headaches, so now is the time to make sure that all data is held securely and is only used for the purposes intended.
9. Make your personal tax allowances as efficient as possible
Make sure you are aware of what tax allowances are available based on your specific circumstances so you can make the most of them. Consider maximizing your pension contribution, as well as making the most out of any capital gains and ISA tax advantages.
Even better, choose an accountant who is knowledgeable and helpful and can ensure you maximize your personal tax allowance and prepare for next year’s accounting correctly.
10. Be sure not to miss the deadline!
Be sure to complete your year-end figures on time and make sure they are accurate and complete.
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