5 simple steps to prepare your business for end of financial year

Date: 29th April 2020

We completely understand that our clients have a lot on their plate right now – the end of this financial year has fallen in tricky times for many businesses. This is just a gentle reminder that it’s important to take some time now to focus on tidying up your accounts, ready for us to prepare your financial statements.

Here’s a few helpful tips to get you underway:

1. Tidy up your accounting software

Have a good review of your Xero and a thorough ‘accounts-cleanse’. Reconcile your accounts regularly and run reports on your accounts payable and receivable to make sure everything is up to date and entered correctly. If there are any trickier outstanding accounts or issues that have been waiting for extra brainpower, this is the time to sort it. Or ask us to help.

2. Take stock now

Value of stock held is included as part of your tax return, used when calculating your taxable income. For accuracy, it’s best practice to do your stocktake as close to March 31st as possible and follow good record keeping processes – document the code/name, quantity, unit costs and value of each item. Depending on your industry, stock-take can be a big (and somewhat disruptive) task! Consider stocktaking software to make your life easier – Xero has some great add-on packages available.

Guide to Inventory Accounting (Xero)

3. Follow up debtors

It’s important to stay on top of aged receivables at year end, so you can ensure any monies which are not likely to be recovered (aka ‘bad debt’) are written off and not included as part of your profits for the year. This gives a more accurate and reduced income figure for tax calculations, ensuring you aren’t paying unnecessary tax on these accounts. Remember, you can continue to pursue payment for invoices written off as bad debt – recovered payments become part of your taxable income for the following year.

4. Deadline planning

Make yourself aware of specific dates for upcoming tax payments for the new financial year and add them to your diary – even if your accountant manages the payments for you. It’s important to understand what payments are approaching to manage business cashflow effectively.

5. Review your systems

End of financial year is a great time to review your accounting systems, as this is often when gaps in processes become apparent. Could you improve your software, or perhaps learn to use it more efficiently? At Findlay Sidekick, we offer Xero support and training workshops throughout the year. Please get in touch if this is of interest and we can send you upcoming dates.

And there it is – five steps that will not only have you well-prepared for the end of this financial year, but on the right track to preparing for the year ahead too. If you’ve got any questions as you’re going through your preparations, please send don’t hesitate to get in touch.

COVID-19 tax support

The government has announced a range of tax relief measures for businesses affected by COVID-19. Some of these measures may be available to your business:

Fresh range of measures to assist businesses affected by COVID-19

Tax relief for businesses affected by COVID-19

Posted in: Latest News, Xero