As April brings a new fiscal year, making a resolution to reflect on your accounts can save your business money and enable efficiencies for the new tax year.
Rather than filing away last year’s accounts, the figures that they hold can provide an invaluable insight for your future budgeting and business planning.
Delve into the historical data and make a financially sound plan for the new financial year this April –here’s how.
Cash flow forecasting
Cash flow is fundamental for any business and cash flow forecasting is an essential element of any business planning. It helps you to predict when money will come in and go out of your business and ensures your business stays liquid and able to meet all its financial obligations.
Your previous accounts will be a useful indicator of future cash flow forecasts. Use them to look at trends and seasonality; and try to assess expected expenditure and revenue over the forthcoming financial year.
A robust cash flow forecast will help you prepare for future costs and factor in a contingency for unexpected bumps in the road. Creating a budget sheet will also help you to avoid over-spending.
Plan your payments
Planning your business’ outgoings and payments is an essential element of preparation for the new financial year.
Rather than annual lump sum payments, making a simple switch to monthly payments could be a better option in your cash flow planning and tax efficiencies.
Plan ahead to ensure that you draw income from your business as tax-efficiently as possible. Utilise your personal allowance for National Insurance Contribution limits for you and your partner (£12,570 each) and use your pension annual allowance (£40,000 or 100% of your income – whichever is lower) as a tax-efficient way of withdrawing money from your business.
Assess your income
An assessment of outstanding invoices and the risk of non-payment will help you to protect your business.
Completing a risk assessment of your accounts receivable will help to secure cash flow. Identify customers with poor payment practices and be wary of how much of your turnover their custom represents. Review your security arrangements and any guarantees your business uses. Identifying customers with good payment practices can help to inform which customers, areas and sectors your future business strategy should focus on.
Review the regular expenditures on your accounts and you can potentially save money in the new tax year. From insurance to professional services like accountancy, it’s always good to shop around to make sure that your outgoings aren’t more than they need to be.
Beware though that the cheapest option isn’t always the one offering the best value.
Get your next tax return done early
Don’t leave it to the last minute – get ahead for the new tax year by getting your next self-assessment tax return done early.
Not only will it give you one less thing to worry about, getting your tax return done early can also potentially save you money by ensuring that you’re on the right tax code for the new financial year and you’re not paying too much to HMRC each month.
Use your accountant
Your accountant isn’t just here to help at the end of the tax year. Your accountant can offer professional advice on how best to manage your business finances over the whole year, advising on tax-efficient ways to run your business that could save you money on your bottom line.
Regular reviews with your accountant will help keep your business plans on track and give you the peace of mind that your finances are being handled by a professional enabling you to focus your attention on running your business.
Share your accounts with your accountant by giving them access to your online accounting software and they can regularly help you to manage all the accounts elements of your business.
Find out more about planning your business finances
To find out how Chorus Accounting can help you create robust financial plans for your business, let’s talk. Call 01202 332500 and one of the team will be happy to help.