When the end of the tax year approaches it’s an important time to review your financial performance and get your accounts ready.
Quick takeaways if you’re in a hurry:
– The end of the tax year is 31 March
– Managing your tax position is a careful balance of income and expenses. It’s important to keep track of both in order to accurately report the financials of your business
– Invoice finance can provide a fast solution to allow you to invest in the right accounting systems or support for your business.
Read on: Be in control at the end of the tax year
(estimated reading time: 5 minutes)
Paying tax is an important part of running a business, but in the rush of the day-to-day it’s not uncommon for managing your taxes to fall by the wayside. If you’ve found yourself de-prioritising your accounts, then now’s the time to give them some focus.
Know your deadlines
The end of year for the tax authorities is 31 March. Once this passes you will be able to finalise your costs and earnings for the full year and confirm your expected tax bill.
Your business tax return will need to be filed by 7 July. It’s important to plan carefully how you will manage this deadline. The process of completing the reporting and paperwork can be time consuming.
Review your position
Pull together a report of your earnings and costs so that you can review your year in full. It’s important to set some time aside to look at these numbers in detail in order to make sure that they are correct. This will be important when you lodge your tax return.
If you haven’t been tracking these numbers across the year then you might like to consider how you could. Putting a plan in place for monitoring your figures now will allow you to proactively plan for your tax bill in the coming year.
Manage your expenses
Your review of the year that has passed should include your business expenses. Keeping track of receipts and costs can be challenging if you don’t have a system in place. If you’re struggling to find the information you need then now is a great time to implement a system that will make this easier for next year. Take a realistic review of what’s difficult and prioritise spending some time on fixing the issues.
Because your business expenses off-set your earnings, this is a good time to make any purchases that your business requires. This will allow you to include the cost within this financial year and potentially improve your tax position.
You should also review the value of your assets and whether this has changed over the previous year. Calculating and reporting depreciation can be an important part of correctly identifying your business expenses and maximising your tax position. If in doubt, ask an expert.
Calculate your earnings
Reviewing your earnings for the year will allow you to calculate which tax level you need to apply and your subsequent tax payment.
Because your tax rate is calculated based on your level of earning, it may be more cost effective to defer a payment from a customer from the end of this year to the start of next financial year – where it will be charged at a lower tax rate.
If you or your business make charitable donations then now is a good time to check that they have been paid. If they haven’t you should try to process them before the end of the financial year so that they can be incorporated into your accounts.
Plan for tomorrow
Running a business can make finding the time to plan for tomorrow challenging. But it’s important to think ahead to how you will finance your retirement. Build saving for your retirement into your budget and discuss with your accountant whether you can manage this as a business expense.
Get the support you need
When your business starts up it can be easy to stay on top of your accounts, but as it grows you may discover you need help. Unfortunately it can often be at the end of the financial year that this becomes a reality.
If you find you don’t have time to manage your taxes on a day to day basis, you might like to invest in a service that will make it easier. There’s a wealth of smart accounting software on the market that can make capturing and monitoring your income and outgoings much easier.
Alternatively you may prefer to use the services of an accountant who understands the tax systems. Tax experts can help you to optimise the ways that you manage both your personal and business finances, in order to make the most of your earnings.
Plan your payments
The size of your expected tax bill can come as a bit of a shock to the system. Especially if you haven’t been tracking it across the year. If you’re operating with tight margins you might be concerned about how you will afford the payment.
The good news is that you have plenty of time between filing the return and making the payment. This includes the time that the tax authority takes to verify your information. But if you’ve decided to invest in some accounting software, manage the cost of an accountant to deal with your returns, or you’d like help planning your tax payment: you could contact Fifo Capital.
Fifo Capital Business Partners can help you to find the best way to fund one-off expenses, or get the cash you need to invest in your business infrastructure. Invoice finance can give you access to cash that is locked up in unpaid invoices. If you have expenses that need to be managed today then invoice finance could provide the cash flow flexibility that you need.
Fifo Capital Business Partners also have a great network of experts that they can call on and recommend, so they can help you to find an accountant or adviser who can make managing your taxes even easier.
Taking a proactive approach with taxes yields financial benefits and ensures that your business maintains a good relationship with the tax authority. Plan in the time to get the numbers processed and you’ll be able to plan how to manage your tax position. If you need help then give yourself plenty of time to call on it: that way you can choose the right expert to give your business maximum returns.
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