There are a number of different activities to sort out before the year comes to a close, so we have created a handy end of financial year checklist to help make things a lot simpler.
Before The End Of The Year Business Progress
Review your business progress
It is a good time to understand how well your business has performed for the past financial year. The ways you can do this are by:
- Reviewing your Profit and Loss statement – A Profit and Loss sheet can help you understand how much profit your business is making and how much you are spending. It also helps you to understand where you can tighten your belt a little in order to improve your financial standing. Alternatively, having a chat with your run[Accounting] advisor can give you a clear idea of where you may be sitting for the year.
- Review Dividends paid for Directors – You can determine what amount of dividends need to be paid out to the director(s). This is where your run[Accounting] advisor can help you determine the best tax planning strategy for you.
- Review the list of Assets & remove obsolete or defunct items – By collecting all records of your asset expenditures, you can get a head start on calculating your depreciation expense claims, as well as the information required for any capital gains tax needs.
- Review cash flow for next 6 months of operating expenses – Doing your homework and understanding what your cash flow looks like and how your expenditures can impact your finances, you can make sure you are prepared for the year ahead. run[Accounting] clients do a cash projection at the year with their advisors to prepare for their next year’s financial spending which removes surprises and helps them stay afloat.
- Review your taxes owing to revenue agency – Do you owe any money to the IRS or CRA? Now is a good time to check on these payments and see if you have any funds still owed to them. This helps you with your financial planning for the upcoming year.
- Review changes to be made to your business process/procedures – In order to get a good start on the next financial year, it’s important to assess your current business processes and see what needs to be changed or updated. You can then utilize this time to create timelines for these changes to take effect in and establish a timeframe for work to be completed. Some of these updates and changes include new software, changes to your business structure (such as changing from a sole trader to a company) or ensuring you have the right insurance in place for your business.
- Backup and secure your information – Making sure your business is safe from fraud and privacy breaches are important, no matter what type of business you are running. Backing up and registering your data in an off-site location that is secure is an ideal solution for many business owners. Using cloud-based software can help protect your business from fraud, so now is a good time to consider the switch.
Before The End Of The Year General Tax Checks
Maximise your deductions
Before the year end is a good time to spend on any necessary expenses to maximise your deductions. Of course, you should still ensure your cash flow is in good order before making purchases.
- Service vehicles – If you have business vehicles that you or your staff are using, now is a good time to get the vehicles serviced and replace any tires that may need attention.
- Service equipment – For any equipment that you use for your business, servicing them now is ideal. Not only can you maximize your deductions, but you’ll also be ensuring your equipment is able to last longer.
- Pay for any fees, memberships or subscriptions – Take a look at any subscriptions or memberships that you’re a part of and get your fees paid before year-end. It could be a Chamber of Commerce membership, a local business group or even a magazine subscription related to your field of work.
- Pay your bills – Any bills that can be paid for in advance or before year-end should be completed if possible. Items such as insurance bills, electricity or phone accounts can all be paid before the end of the month for maximum effect. You may also be able to get a discount on your rent if you prepay for a period, so it’s best to have a chat with your real estate agent to see if this is possible.
Make sure last year is finalized
Before another financial year is over, have you finalized everything for last year? Are all adjustments from last year finalized? Have you lodged your tax return and have a copy? Making sure everything is finalized can help ensure you can adjust any data files for any adjustments by your accountant and any impact of the end of the year tax.
Private expense adjustments
You can review your expenses and see if any personal expenses paid via business need an adjustment on the books. Your accountant can make appropriate adjusting entries to ensure that your expenses are not overstated due to personal deductions which can land you into an income or sales tax audit.
Stock and inventory
Are you overflowing with stock? Need to know how much stock you really have? Reviewing your stock list in detail can include when your items last sold and at what price. If you have too much stock, consider having a sale and discount your items that are slow to move from your store. This will help improve cash flow in the short-term.
Consider writing off the value of the stock that won’t sell and take a full stock count on year-end. Enter these figures through Stock Count and Inventory and adjust as required.
Plant and equipment
For any existing plant and equipment, obtain a list of your assets the accountant uses to calculate depreciation. Take the time to review this list and remove any items that no longer exist or are obsolete. Be sure to highlight these items to your accountant, as well as inform them of any items that have since been sold.
Ensure you don’t have any payroll discrepancies between remittances made to the govt and what your payroll reports are stating. Check if there are any payroll liabilities owing to the government, you might want to clear those to avoid any late penalties and interest
From stressful to stress-free
The end of the financial year can be a whirlwind of stress for many business owners. With so much to consider and take care of, it’s no wonder that many people find themselves worn out.
If you’re having a difficult time understanding your obligations or would like to know more about how to get your business sorted for the financial year ahead, have a chat with us at run[Accounting]. Our team can help you as much or as little as you need in your business journey. We’re here to ensure you stay compliant, understand your obligations and can help you understand how well your business is performing.