SIMON HODGE OF COAST AND CITY ACCOUNTANCY LOOKS AT WHAT SPRING BRINGS TO BUSINESS OWNERS AND COMPANIES AT THE START OF THE NEW FINANCIAL YEAR
The arrival of spring coincides with the tax year end and the traditional year end of 31 March for many businesses and companies. This is the time to finalise the past year and an ideal opportunity to take a fresh look at your business for the year ahead.
On finalisation of a year end it can be helpful to consider the following:
Have all costs and income of the business been reflected in the correct period?
Was it a good year and are there bonuses to pay? If so, have these been included in the correct period?
Is there a holiday pay accrual to be made?
Are any provisions required against bad debtors or for costs that you are to incur in the future that you are obliged to meet?
Is there a director loan account in the company? If so, it would be a good idea to get this cleared down as the budget announced an increase on the rate of tax for loans to participators from 25% to 32.5% from 1 April 2016.
Are you fit for the year ahead?
Now is a good time to be proactive in your business and set your objectives for the year ahead. Upon doing this it can be helpful to consider the following:
Have you forecast how your business objectives for the year ahead will look financially?
Have you set up review periods to monitor your progress toward achieving your goals? This can help identify any issues early on and enable you to take positive action and tackle any problems before they become significant issues.
Have you conducted a variance analysis on the finances of your business to see what impact any unexpected outcomes that are not in line with your expectations will mean for you and your business?
Will you have up to date financial reporting and forecasting to help make the most of current opportunities and really plan ahead?
New UK GAAP
The new accounting standards are now in place for limited companies. This will affect some businesses more than others. This impacts not just the new reporting period but also requires the restatement of the prior period. This can also mean changes in tax reporting and changes in the calculation of taxable profit.
Digital Tax Accounts
By 2020 the government expects that business accounts software will feed data straight into its digital tax account. Additionally, quarterly reporting of business performance to HMRC will be required for accounting periods or tax years starting after 5 April 2018 starting with businesses under the VAT threshold and individuals with a secondary income that is greater than £10,000. Such a change needs to be planned for, systems put in place and accounting procedures put in order. Are you ready for this?
There is much to consider at the year end, even more so with the changes that have and are to take place as outlined above. What is written here barely scratches the surface and there are some significant issues and decisions to be made now for the current and following years ahead to make sure that you not only survive but also thrive in the future.
Engaging the services of a professional advisor is an important ingredient to the success of any business and will help add real value to you and your business. If you are interested in discussing any of the above then contact us and see what we can do for you.
Coast & City Chartered Accountant and Tax Advisor