To end the financial year in tip-top shape and prepare for a successful new year, getting everything in order and ensuring your business is in the best position it can be is vital.
This months’ Sysum Howard Duggan blog rounds up the main areas to address.
Review financial records – This includes invoices issued and paid, business expenses recorded, bank reconciliations completed and payroll processed.
Examine salaries and payroll – For many limited company directors, a combination of low salary and dividends is the most tax-efficient route. As part of year end planning, review director’s salary levels and ensure you’ve reached the optimum salary threshold for National Insurance and tax purposes. Look closely for any PAYE compliance issues and finalise employee bonuses and associated payroll.
Make good use of annual allowances – It’s important to use up all available allowances before year end, such as annual investment allowance (AIA) – claim 100% of qualifying expenditure (equipment, office tech etc) against profits and pension contributions – employer pension contributions are an allowable expense and could help to cut your corporation tax bill.
Maximise allowable expenses – Go through your expense claims and ensure you’re claiming everything you’re entitled to. This can reduce your company’s profit and, in turn, your corporation tax bill. Some commonly overlooked expenses include mobile phone use (business proportion), home office costs, travel expenses and mileage, software subscriptions and industry relevant training.
Declare dividends strategically – They can be a highly tax-efficient way to extract profits from your company, but timing is key. Calculate your company’s retained profits, decide on the appropriate dividend amount and ensure the right paperwork is in place. Remember that declaring too much could lead to unnecessary personal tax, while declaring too little might waste your basic rate band.
Plan for corporation tax – Liabilities are due nine months and one day after your company’s year end. Don’t wait until the last minute to allocate funds. Estimate your tax liability and begin setting cash aside. You could also consider making early payments to reduce interest or penalties.
Finally, take time to sit down with your accountant and review business performance, identify tax-saving opportunities and look ahead to the coming year.
Let Sysum Howard Duggan help with the year end legwork. We have a passion for allowing you to concentrate on what you do best – running your business.
Call 01905 622202 or email support@shdco.co.uk to start a conversation.