As your company year-end date approaches, start planning for several administrative and financial tasks. Getting organised early is a good idea.
There are several things to check, either on the company year end date, or before the end of your company’s financial year. Some tasks are simple administrative processes, while others involve a deeper dive into your accounts. On the whole, this is about getting on top of the planning and ensuring your year end is as hassle-free as possible.
The benefits of good year end planning include:
- A smoother year end – keeping on top of the company’s bookkeeping and administration means that the processing of your year end will go more smoothly.
- Better tax planning – Reviewing your business performance before the year-end allows you to manage your tax obligations more effectively. This can improve your tax efficiency and potentially save you money.
- Improved personal wealth planning – as an owner/director, you can structure your own remuneration package in a way that you prefer. This improves your personal tax situation and wealth planning for the year end, driving tax efficiency.
- Enhance your reported profits – by adjusting the timing of some discretionary transactions, you can directly influence the results reported for your company. This can be an advantage when looking for funding or investment.
A checklist for your company year end tasks
We’ve highlighted the main year-end tasks to add to your to-do list. These are broken down into administrative, tax-driven, and cosmetic tasks. All are aimed at ensuring a stress-free year-end process.
Primarily admin issues:
- Make sure that you are able to put a correct value to the stock you hold in the business and on your current work in progress (WIP).
- Ensure all your sales invoicing is up to date and all jobs for the year have been billed out to customers.
- Resolve any customer (and supplier) queries, where possible. And, if it’s practical to do so, write off or provide for any bad or doubtful debts.
- Make sure all the company’s bookkeeping is up to date and that all balance sheet accounts have been reconciled.
- Prepare draft figures at least one month before the year-end. This timing allows for any last interim dividend declarations to be made.
- Keep final statements from all your major suppliers.
- Keep an extra copy of the last invoices for utilities and services, for cost accruals.
Primarily tax driven:
- To qualify for tax relief, payment for fixed assets acquired during the financial year must be due within four months after the year-end. If payment is not made within this period, the actual payment date will be used instead of the acquisition date. For assets bought on hire purchase, the relevant date for claiming tax relief is when the asset is actually brought into use. If you plan to purchase new assets, consider buying them a few months earlier than planned. This allows you to claim the tax deduction sooner. However, avoid buying unnecessary items solely to save on tax.
- Charitable donations must be paid in full to the charities; simply providing for them in the accounts is not sufficient. If you donate a percentage of the company’s profits or sales to charity, estimate the final amount as accurately as possible. This ensures that the obligation is mostly fulfilled by the year-end.
- Tax relief on pension contributions is granted for the period in which the payment is made. Therefore, avoid delaying contributions until after the year-end.
- Review the remuneration policy for your shareholder directors to ensure the right balance between salary, dividends and pension contributions.
- Review directors’ loan accounts, particularly where they’re overdrawn and therefore potentially subject to Section 455 charges.
Cosmetic/other:
- You may want to make the company’s performance look as good as possible – ie moving results from a future period in order to make the current period look better. This can be helpful if you’re looking to access finance in the next year, or want to impress potential investors etc.
- You may want to think about deferring expenditure to improve your overall reported profits. This could mean reducing spending on things like stationery, advertising, research and development, capital expenditure and major repairs and renewals. Although that will result in a higher tax bill, it will also allow a higher reported profit to be disclosed.
Talk to us about preparing for your year end
The better prepared you are, the easier your year end will be. So, there’s real value in running through the checklist above and getting your finances ready for the close of the current year.
We can help you get your numbers in order and advise you on any elements where you might need some help or have queries.
Contact the Team on 0161 703 8353 or email hello@jeffreyahuddart.co.uk.
