Tax & Accounting News

Planning For The Year’s End

23/10/2009

The year-end for a business is invariably a busy time, as owners concentrate on securing extra last-minute sales and profits, but it is important not to overlook the process of pre year-end planning, especially for tax reasons.

Unlike the tax year-end on 5 April, business year-ends can vary, although most owners choose either 31 December or 31 March. Pre year-end planning should ideally start in the last quarter of the year concerned, and look at such issues as the level and treatment of potential profits, and the scope to reduce the overall potential tax liability.

This could be done by reviewing capital expenditure to maximise the use of tax allowances, considering tax-efficient pay and pension arrangements for directors and owners, and considering the basis for profit extraction, including taking dividends instead of salary. Other actions that should be taken include considering bonus payments for staff and directors, reviewing directors’ loan accounts, reviewing the timing of transactions and catching up with revenue expenditure, such as maintenance costs and expenses claims.

Conducting a year-end planning exercise also provides an opportunity to consider whether the year-end is currently at the most appropriate time, as well as wider issues including the structure of the business and the overall aims and aspirations of its owners. It is also an opportunity for accountants to ensure that records are up-to-date and there are no anomalies in a business’s accounting systems, as well as considering the budget and forecasts for the forthcoming trading period and remuneration planning for the following year.

For more information or help with year-end planning, please contact us.