Preparing for the end of a tax year can seem like a daunting prospect but rather than fearing it, think about embracing it as the great opportunity it is to get your business in order. That task is made that much easier when you have a partner relationship with your accountants and are using online accounting systems such as Xero and FreeAgent.
According to Xero, accountants encounter five common issues that waste time and money when preparing clients’ financial statements and tax returns:
- Missing information
- Inconsistent and incorrect coding
- Bank reconciliation issues
- Processing errors with invoicing
- Poor communication
Get your house in order
Up-to-date and accurate information are prerequisites when it comes to completing tax returns. Online accounting systems go a long way to ensuring this, especially if they have been set up by your accountants to capture and store all necessary information. Even better is to work with an accountancy firm that will take the responsibility off your hands entirely, reducing the potential for problems and errors even further.
They will check the following:
- Your bank account – is your account fully reconciled and does it match your actual bank statement balance? If not, the error needs to be located and corrected. It’s crucial to have an accurate picture of what’s going in and out of your bank account, otherwise you could spend money you don’t have. Worst case scenario, you could get fined by the Tax Office for inadequate record-keeping.
- Invoices, bills and payments received – have all those that fall within the current tax year been entered, approved and banked? Do you have any outstanding invoices that need to be collected or bills that need to be paid?
- Expenses claims – have you claimed every legitimate business expense you can? They will track down those receipts and take into account non-cash items, such as business mileage and use of your own home. Every sum you claim in expenses is a deduction from your profits, which in turn means less tax.
- Paperwork – they will ensure there is the hard evidence that will back up your return, such as bank and credit card statements, and supplier statements of accounts.
Year end made easy
Having made those necessary checks and collated the relevant paperwork that may be required, it’s now time for your accountant to complete your business’ year end.
Where a business is running an online accounting system, it is simple for the accountant to log into your account, make updates and adjustments, and complete the entire process of filing your year-end accounts and tax returns.
If you need our expert accountants’ advice now about how cloud accounting could help your business email Jon now.