Brought to you by
downlaod

The Access Group provides integrated business management software.

Save content
Have you found this content useful? Use the button above to save it to your profile.

10 key steps to make year-end as seamless as possible

6th Apr 2020
Brought to you by
downlaod

The Access Group provides integrated business management software.

Save content
Have you found this content useful? Use the button above to save it to your profile.

The end of the financial year is upon us, which means finance leaders and CFOs have a lot on their minds as they prepare to close the accounts for another year. The coronavirus pandemic is drastically changing the face of companies and workforces across the world. With many staff potentially working remotely, such a crisis requires deep planning and preparedness. However, it is important not to forget that these days, it is more important than ever for CFOs to keep on top of the books — what with HMRC keeping a watchful eye on those companies whose bookkeeping is not up to scratch.

In the months following the end of the last financial year, the UK government fined 152 senior finance executives and CFOs as a penalty for tax accounting failures. The fines were introduced in accordance with the Senior Accounting Officer (SAO) regime, announced in 2009, which permits HMRC to issue fines of £5,000 to CFOs if they fail to accurately account for their business income and expenditure with regards to tax purposes. In the last 12 months alone, the amount of senior finance directors and CFOs fined by HMRC has increased by 22%. This is up from 125 in 2017/18.

In order to ensure you avoid any penalties and enjoy a seamless end to the financial year, we have put together the following checklist. Read on for a guide to make the year-end process as seamless as possible in these times of uncertainty.

1. Process employee bonuses

Hard-working employees deserve to be rewarded, and if you decide on handing out bonuses this year, be sure that you don’t forget that taxes apply — as bonuses for staff are subject to income tax, similar to regular salaries. If, however, you decide to wait and pay the bonus after the year’s end, you can accrue for employers’ national insurance costs as well as the bonus and reverse when the payment is made. This way, the cost is included in the correct financial year and will likely lower corporation tax bills for the company.

2. Safeguard cash balances

Consider postponing payments to suppliers by a short period to keep cash balances as high as possible. While supplier liability will be logged on the balance sheet, a higher cash balance is certainly preferable and helps to improve credit agency ratios. In light of the instability of many markets and supply chains right now, it is especially important to maintain open communication with suppliers and safeguard cash balances whenever possible.

3. Employee expenses

Be sure that all employee expenses are processed before the end of the financial year and that this is included in costings for the correct tax year, which will once again reduce liable corporation tax. It is important also to consider the additional expenses employees may have accrued through working from home as a result of the coronavirus outbreak.

4. Review control accounts

Review wages, PAYE, pension and VAT control accounts while ensuring that these reflect the accurate positions of liabilities. Also be sure to check prepayments, accruals and deferred income. If your balance sheet is incorrect, your profit and loss account record will likely be incorrect too.

5. Balance sheet analysis and profit and loss

Using the relevant accounting software, review your balance sheet to determine what you did well in the year just gone and what you could improve on. The same goes for profit and loss reports. Generate profit and loss reports and spend some time analysing and identifying what your business did well and what requires more attention.

6. Cash flow analysis

The success of your business is defined by cash flow. Once again, make use of that accounting software you have invested in and create your cash flow statement to analyse and forecast. It will be essential for all business operations in the year to come. It is also important to factor into your analyses the potential effects of the coronavirus outbreak, and consider possible changes the company will have to undergo in the coming month — including an awareness of recent government announcements on tax and business relief in light of the pandemic.

7. Corporation tax estimation

Accurate tax estimations are vital for medium to large businesses, so it is crucial that you correctly calculate what corporation tax you are liable for this year. As of March 2020, the corporation tax rate is set at 19% of net profit, which is scheduled to reduce to 18% from April 2020.

8. Tax payment extensions

Figure out whether or not you will need an extension on your tax payments. You can consult HMRC for this, but make sure you have worked it out as early as possible. Otherwise, you will be liable to pay a penalty.

9. Client list review

Ensure the contact information you have for your current client list is up to date, but also keep in mind GDPR and delete any unnecessary data you are holding. Now is also a great opportunity to reach out to your clients and thank them for their business this year and wish them good health. They’ll appreciate it and we can all benefit from a little extra kindness at this time.

10. Set goals for next year

Did you achieve everything you intended to last year? If so, fantastic! If not, it is best to figure out why. Setting objectives for the coming financial year will help keep you stay motivated, while reviewing will maximise your chances for success as your business grows. While global economies are changing, and it is difficult to see what the coming months will hold, it is more important than ever to remain motivated and maintain staff inspiration through proper planning and goal setting.

Find out more

You can read our extended end-of-year guide here