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Although year end is always a busy time for small business owners, there's steps you can take to ensure the process goes as smoothly as possible, while also taking advantage of any benefits.
And if you've been considering starting a pension scheme for directors, upgrading your IT system or making other capital purchases, this can be the best time to move ahead.
Take stock
If you're a business with stock, it's well worth doing a few checks at year end.
Stock often has a big impact on the profitability of your business and the corporation tax that will be due. Before year end, check for any missing stock as this will need to be written off as a loss.
Do you have goods in stock which you haven't yet been invoiced for, or do you have sold items which you have yet to invoice for? A stock take can help to show any errors in your books so you can ensure that your figures are accurate. It can also help you to plan ahead and to order new stock.
Get your Purchase Ledger in order
It's worth going through your records carefully to check what is owed to your suppliers and what has already been paid. Things which could at first appear to be errors, are sometimes payments getting out of step, supplier bills entered twice or payments which haven't been linked to a bill.
Check your Accounts Receivable
As year end approaches, it's worth checking and clearing as much as possible of your Accounts Receivable - the amount of money that's owed to your business. Leaving it to build, will impact the amount of cash you have access to and cashflow is crucial to every business!
Check your bank statements
We recommend that clients check their bank statements every couple of weeks at least – to ensure that nothing unexpected has left your account and to ensure that cashflow is healthy. It can also alert you to any unpaid invoices or failed payments, which will need following up.
Financial planning
Financial planning and being one-step ahead makes good business sense and you should arrange a review meeting with your accountant well ahead of your year end. This means that you will have plenty of time to implement any changes and to take advantage of any tax benefits before filing your accounts.
Get your finances on track and discuss your savings and business goals with an expert. The session should help you to start the next tax year with all the information you need to succeed.
Use the latest technology to get paperwork in order
Accounting software packages offer on-premises apps, as well as cloud-based versions that accept business payments, manage and pay bills and payroll functions. Once you've switched, you'll find that it helps to put your business in the best possible financial position.
At year end, you may need to provide proof to back up some of your figures and having things automated will save you stress, time and, in the longer-term, money.
Contribute to a pension scheme for directors
Starting a directors' pension scheme can have short and long-term benefits for you and your business. They can only be accounted for in the same financial year that they are made, so it's important to set this up well in time for your year end. The contributions are tax deductible, which makes good tax sense in the short-term and a focusing on the longer-term, a pension scheme is an excellent way to prepare for retirement. Speak to an Independent Financial Adviser about the scheme that best meets your needs.
Capital assets
If you've been eyeing up the latest electric car, your computers are outdated or you need other new equipment, your year end is the perfect time to make those investments. They are tax deductible and similar to a pension scheme, can only be accounted for in the year that they are purchased, so if you're profits allow, purchase before year end.
Zero-emission car drivers have zero company car tax
If you've been thinking about switching to a zero-emission car, now is the time to do it! To accelerate the shift to zero-emission cars, all zero-emission Pure Electric Vehicles (PEVs) models, regardless of when they were registered, will be subject to an extremely favourable rate.
Drivers of these PEVs paid no company car tax in 2020/21, rising by 1% in each of the following two tax years.
Reduced percentages will apply to lower emission cars and new bands are introduced for hybrid vehicles with emissions up to 50 g/km (depending on how far the hybrid vehicle can travel solely under electric power). Read more about going green in one of our previous Blog posts https://www.giltinan kennedy.co.uk/news/blog/archive/article/2020/January/gear-up-for-changes-to-greener-company-car-benefits-this-april
About us
Giltinan and Kennedy works in partnership with many businesses, charities and individuals across Horsham, West Sussex and beyond. Please feel free to get in contact with us for an informal chat about >your business finances on 01403 337490 or learn more at https://www.giltinan-kennedy.co.uk/services/tax-advisers