Getting ready for your financial year-end requires time, hard work, and undivided attention. It is time to prepare all your financial records for tax filing and if your company is externally audited, your auditors will often require that you provide them with an audit file. Often, the financial year-end is a doubly busy time of year, as it may be the end of the calendar year for many businesses. Adequate planning can help you ensure that your year-end tasks are timeously completed, avoiding last-minute stresses or, worse still, not being prepared for the external audit.
I’ve listed a guideline to help businesses will help you get your income taxes in order and jump-start your business planning for the financial year ahead:
Create a financial year-end countdown
Preparing for the financial year-end can be a lot of extra work on top of the day job, so create your business’ year-end countdown with calendar reminders and a progress chart.
Brief your employees and as well as your bookkeeper on the fact that it’s year-end and encourage them to do everything they can to tighten expenditure, collect purchase orders and invoices, file expenses, and clinch every last order.
Make sure your accounts are up to date
First, you need to prepare (or have someone prepare for you) the standard three business financial documents that will be the basis of your decisions.
The balance sheet is a summary of how your business’s financial position at any point in time. It shows all your assets, liabilities, and equity.
The income statement (aka the profit and loss statement) itemizes your revenue expenses for some time and lets you see at a glance whether your business is profitable.
The cash flow statement reconciles your opening cash with your closing cash for a particular period, showing you where the money has gone. To prepare a simple cash flow statement for a particular time (such as the year just past), ask your accountant to help you list and summarize your business’s cash flow inflows and outflows.
This will show you the net increase or decrease in your business’s cash over that period and highlight at a glance where the money went.
Ensure your employee data is up to date
Ensure your payroll and expenses calculations are correct at year-end. You need to double-check all your employee data is accurate. You as the employer are liable for any mistakes in income tax or national their wages back, later on, make sure it’s all up to date.
Be sure to also keep track of all expense claims and ensure employees attach the correct receipts to their expense forms throughout the year.
Chase unpaid invoices
You want your books to be as accurate as possible, so you need to know exactly what you have and what’s missing. Chase down any outstanding invoices, then check the final amount matches with your records. If there are any discrepancies, you should thoroughly investigate these before submitting your accounts.
Count your stock
If you have stock, this should be handled similarly. Complete a full inventory of all your stock and log if there are any discrepancies with your records. If there’s stock missing you can try to chase it down or count it as a loss if it can’t be traced.
Clear communication with your bookkeeper
As a small business owner, it’s likely that the two times of year that you will talk to your external accountant or bookkeeper the most are at tax season and year-end.
During these busy times, you must let your accountant know what your expectations are in terms of communication. Think about the time of the month you wish to check-in, the format of the files you prefer to receive, while also specifying if you have any bespoke reporting needs. An example of this could be if you are expecting some deeper analysis from your accountant regarding the financial health of your business, as opposed to having a bookkeeper that just files your taxes.