The end of the financial year can be a hectic time as you race to finalize accounts, submit tax returns, and get all your financial ducks in a row. However, with some planning and preparation, you can set yourself up for a smooth and successful financial year close. Here are some tips:Thank you for reading this post, don't forget to subscribe!
Review Spending and Tie Up Loose Ends
– Take some time in the final months of the financial year (March-June typically) to review your spending and financial records. Are there any outstanding expenses or unpaid invoices you need to account for before closing out the year? Tie up any loose spending ends.
– Reconcile credit card and bank statements to ensure all transactions are accounted for. Log any tax-deductible expenses you may have forgotten about.
– Review business mileage and expense logs to identify any tax-deductible expenditures. Every little bit counts when minimizing your tax liability.
Run Projections and Forecasts
– Update your profit & loss statements and balance sheets. Run some projections to estimate your final position at year-end for tax purposes.
– Forecast your likely tax liability and run some what-if scenarios around levels of business income/expenses to plan tax payments.
Tidy Up Record-Keeping
– Get your record-keeping organized, back up files digitally, and purge any outdated/irrelevant financial records. Tidy archives will save time next year.
– Confirm your record retention and destroy policies aligned with tax authority requirements. Retain minimum recommended documents, but safely destroy aged, unnecessary records.
Plan ahead for Next Year
– Reflect on lessons learned this financial year and note any processes or accounting methods you could improve for next year.
– Set reminders for key deadlines in the next financial year so you’re better prepared well in advance.
Following these end-of-year best practices will help you close out your financial year smoothly, maximize deductions, understand your tax position, and begin the new financial year organized and in control of finances.