Your business year end is an important date to be aware of. All limited companies have their own ‘financial year’ initially set in relation to when the company was formed. Although deadlines for filing the company accounts, tax returns and payment of corporation tax could be months in the future, there are steps you can take before your year end passes which will help put you and your business in the most beneficial position possible.
Contribute to a pension scheme for directors
If your profits allow, setting up and contributing to a directors’ pension scheme can have short and long-term benefits for you and your business. In the short-term, these contributions are tax deductible. They can only be accounted for within the financial year they’re made, which is why it’s important to be aware of your year end date so you don’t miss the deadline.
Long-term, a pension scheme is an excellent way to prepare for your retirement. As an owner, it’s easy to forget that your business is there to benefit you. You’re pouring your heart and soul into it every day, and you deserve to reap the rewards of that in the future.
Contributions to a pension scheme shouldn’t impact your ability to run your business in the present, which is why we advise that this is only done if you have sufficient profits. If you do, a tax deductible means of preparing for retirement is a win-win!
Purchase those assets you’ve been after
You’ve got a long list of equipment you want, or need, for your business: some new computers. Updated machinery. Maybe even an electric vehicle. But actually making these purchases keeps getting moved down your to-do list. If this sounds like you, and your business year end is coming up, now is the perfect time to make those investments.
These types of costs are considered capital expenditure, and they’re tax deductible as part of your company’s Annual Investment Allowance. Again, just like contributions to a pension scheme, they can only be accounted for within the year they’re purchased, so make sure you don’t close out your business year without investing in some new assets!
Conduct a stock take at your year end date
A stock take is when you assess the amount and value of stock your business owns. Your stock adds to the overall value of your business, so having an up-to-date and accurate record is important when it comes to filing your company accounts. In addition to this, conducting a stock take can:
- Help you clear out old or broken stock to make room for new stock
- Identify discrepancies or errors in your books so you can ensure all your numbers are correct
- Prepare you for forecasting, ordering, and distributing new stock
- Improve your customer service by knowing exactly what you you can provide for your customers
Check your Accounts Receivable
Your Accounts Receivable is the amount of money that’s owed to your business. If you let customers purchase on credit your Accounts Receivable will go up. While this won’t impact your profits, it will limit the amount of cash you have access to, which is important to the daily running of a business.
Before your business year end, we recommend clearing down your Accounts Receivable as much as possible. This will not only look good on your company accounts but will do wonders for your bank balance!
Get your paperwork in order
Accurate bookkeeping is at the heart of every successful business. Cloud accounting software, like Xero, can be incredibly liberating when it comes to the day-to-day burden of bookkeeping and provides real-time access to your business records for both you and your accountant. When it does come time to prepare and file your accounts, you may need to provide proof for some of the figures you’ve recorded, and preparing for this before your business year end will save you lots of time and stress in the future.
Some of the documents your accountant may ask you for are:
- Bank and credit card statements
- Loan documentation
- Payroll reports
They will also want to know if there are any expenses you haven’t claimed from the business yet, including mileage.
Ask for a pre year end planning meeting
In addition to having your paperwork in order, we recommend having a pre year end planning meeting with your accountant. This will help both you and them understand your business current position and the steps you can take to reach future goals. We’ve also found it invaluable when it comes to forging working relationships with our clients and planning for their success. Read more about how Starfish Accounting can help you make small changes for quick wins here.