Managing year end deadlines more important than ever
As year end approaches for many small businesses, the Institute of Chartered Accountants in England and Wales (ICAEW) warns SMEs to think ahead and start planning now so they are not faced with any bombshells.
Clive Lewis, Head of SME Issues at ICAEW, says:
“It is essential that you build time into your workload for year-end planning. This will ensure that there are no surprises, or missed deadlines and that you have sufficient time to discuss any issues with your advisers and shareholders. These issues need to be reviewed on an ongoing basis.”
The ICAEW advises that as year end approaches businesses should receive a letter from their chartered accountant reminding them of the date of their year end, requesting the necessary financial records and information, and suggesting clients make contact after that date to supply their company books and records. One of the most overlooked areas is stock and work-in-progress. If a company has stock, they should ensure that it is counted on the said date and valued at cost, and at the same time provide details of any relevant work in progress. A chartered accountant will prepare financial statements based on the information they are supplied.
“The financial statements are vitally important. As well as forming the basis of the tax liability, and for limited companies filing with the registrar of companies, the financial statements will be important to providers of finance and for the credit reference agencies. It is worth making the extra effort to get the statements right.
“In the discussion between the chartered account and the client about the draft statements, you would usually focus on what the key ratios (such as gross profit percentage) indicate about the condition of the business; the tax liability arising from the statements; the business’s future prospects and whether there is room for cost cutting. This might include lower fees for preparation of the financial statements. Clients should ask their chartered accountant what more they can do to reduce the time taken to produce the statements.
“On completion of the year end process, you would probably receive an itemised invoice from your chartered accountant with the main cost headings identified. If the charges show a significant increase you should challenge these and discuss how you can reduce the charges in future.”
For further reading take a look at the free business guide choosing an accountant.