With the end of the financial year fast approaching, you’ll need to start planning now to ensure you wont need to frantically crunch the numbers to meet the deadline.
Here are some tips to make the process as smooth as possible, plus tricks to boost your cash flow:
Don’t wait to buy capital items
If you buy bigger ticket items now, you’ll still be able to claim depreciation on this year’s tax claim. Anything that is purchased after March 31 cannot be claimed until next year.
Suppliers often offer end of financial year deals. If you can buy now but pay later, your new purchase will officially hit your books before end of tax year.
The best way to avoid last minute panic before your return deadline is to keep your accounting records up-to-date throughout the year, but that’s often harder than it sounds.
Even if you’re keeping your accounts up to date on a weekly or monthly basis, there are a few additional things you can do to streamline the year-end process. Talk to your accountant as soon as possible and agree on a deadline for having your accounts to them for closing and sign off. Using a computerised accounting package can save you a lot of time and hassle every day, not just at the end of the financial year.
Write off poor-performing assets
Now is the time to free up old stock and assets you no longer require. Old computers, out-dated machinery and equipment are the biggest offenders. These can be sold and converted into cash.
Write off poor performing stock stuff you can’t sell. It will increase your cost of goods sold and reduce your taxable profit.
Get the small stuff right
Is there any upcoming work you can invoice in April, rather than March? It means the income gets counted in next year’s profit, not the current year.
Make sure you claim home expenses if you operate any part of your business from home. This is an added expense for your business, reducing your taxable profit.
Estimate your profit now
If you estimate your profit now, you’ll get a clear idea of your cash situation – so you can save for a rainy day or splurge on items your business needs. The sooner you are able to do this, the sooner you can identify areas that require attention and implement the changes needed to turn things around.
You might have been lulled into a false sense of security by turnover that was rising month-on-month, but failed to notice that net profit was declining as costs rose at a faster rate than turnover.
If your profit has been increasing, then you may need to pay more provisional tax, interest penalties, or you could have a nasty surprise at terminal tax time. The key is knowing what you need to pay well in advance.