The end of tax year always comes around far too quick. It often leaves business owners unprepared and out of time. here we have enlisted the help of 11 business owners who have agreed to tell us their industry secrets on making the end of tax year a simple aspect of business life.
Stephen Nightingale – Nightingale – Online Jewellers
Stephen stresses the benefits of utilising cloud accounting software: “We use Xero with our HSBC Direct account for most of our transactional needs, including VAT returns. We have to say we’re very impressed – it really is a one-stop shop.
Whether you’re an app user or not, the key to ensuring a slick tax return submission is consistently ensuring your books are up-to-date and getting everything handed into your accountant in plenty of time.
If you’re lagging behind, try to relax. The more cool and collected your approach, the faster you’ll get back on track.
Dawn James – DawnJamesCPA – CPA Company
First off, you need to plan for year-end. You need to review your profit (or loss), year to date. Then you need to estimate income and expenses for the remainder of the year. Once you have this information, you need to see where you are going to be “tax wise”. Then you need to see what you can do to reduce your tax liability. If you have the cash or credit, consider paying January expenses in December. Hold off invoicing late December. Maybe, even consider purchasing a new piece of equipment. Once you have that done, you can gather up all your information.
Your information should be totalled by category. If you use accounting software, this should already be done. I would review all purchases over £500. This needs to be determined whether it is an expense or needs to be capitalised.
I would total up the number of miles you used your (or your business’s) for business, and the total number of miles driven for the year. I would review all balances on loans, credit cards to see that all interest has been booked and the balance in your accounting records is equal to the statement balance.
Stephen – Surging Life – Health & Wellbeing Coach
Whilst a long time ago I used to leave everything to the last minute, and endure late nights getting everything calculated and all the headaches that go with that, I have made the move to being prepared well in advance now.
As I move through the business year I keep track of receipts, filing and keeping them cataloged in a manner that makes year end easy and efficient. Simply stapling them to a piece of A4 and writing an explanation alongside is helpful. Though with tools such as Excel and OpenOffice the whole job has become even easier. Whilst I do still keep the paper copies of the receipts filed and cataloged for proper reporting, I have everything entered electronically too. In doing so I can get a really good idea of the headline figures well in advance and as such can ensure that everything is ready in terms of funds.
I have found it is also worth planning a slight lull in ordinary business activities for that time too. If I am too busy planning new projects, finalising existing projects, developing material and fresh sections of the website then I can become tunnel visioned and end up putting off the tax until late, something which then leads to late nights and lack of sleep. By giving myself a less full plate at that time the process of going through and completing everything efficiently and with a minimum of stress becomes so much easier.
Taking a few minutes out every hour or so to just clear the mind in meditation is also highly beneficial I find. By doing so I am able to focus far better when I am going through the calculations and reporting, and as such minimise any opportunity for errors. Realistically it helps me to work smart at my mind stays fresh and clear.
I generally am careful about what I eat and drink anyway, though at tax time I am really careful. I stick to drinking pure water or warm water and generally stay well away from sugar, this again is something that helps me to stay focused and keep my mind in the most effective zone. Again, working smart.
Background music is also good for me, by having something which is moderately relaxing, perhaps with embedded alpha rhythms if I feel the need, I can help myself to work in a calm and highly effective way too. This wrapped in with keeping off sugar, drinking plenty of water and taking a short break every hour, along with prior preparation has enabled me to cut a huge chunk of time off what used to be needed when tax time rolled around. Now as well as doing it much faster I also do it in a calmer way that has far fewer incidents of error and far less stress than used to be the case.
Pierre-Renaud Tremblay – Dupray – Steam Cleaning Equipment Suppliers
Consistent work throughout the year prevents major tax season disasters. At the end of the day, the more work you can put in throughout the year, the better off you’ll be. Taxes are about monotonous legwork. Even if it’s fifteen or twenty minutes a week, the fact that you are carefully sorting out your papers or highlighting specific expenses that will require attention will be of benefit. When it comes time to actually figure things out, you’ll be prepared.
Andrew Halliday – Coreter – Digital Marketing
When I first registered with my accountant they spent a day training me on Sage so that I didn’t make any mistakes inputting receipts, invoicing companies etc. Then prior to me sending off my VAT return each quarter they do a quick analysis to make sure everything is correct.
More importantly, I have an email address set up called invoices@…. And every invoice / receipt I get that week, I automatically forward to this address.
I then login on a Sunday evening and for an hour spend an hour inputting all this information – two reasons, I don’t get distracted during the normal working day and either input something incorrectly or forget to and because then my accounts are pretty up to date, it means less work for the accountant and a lower bill at the end of each year.
Paul Haydock – DueCourse – Cash Flow Technology
The first thing to do to ensure a smooth end of year is to ensure that you are utilising the latest cloud accounting technology (such as Xero, Sage One & Quickbooks) to keep your books up to date.
Next, contact your accountant well in advance and ask him to dive into your accounts to check everything is ok and ready for the end of the year. Be proactive, and year-end will be a breeze!
Finally, if you realise you have to pay the tax man more than you expected, you can always use DueCourse to release some of the money tied up in your unpaid invoices.”
Bryan Clayton – GreenPal – Digital Lawn Care
Greenpal is best described as Uber for Lawn Care. In my previous company, I founded landscaping firm that over 15 years grew to 150 employees and 10 million a year in revenue.
Over the course of that journey as a leader I made a critical mistake and was cheap with my tax advice and the selection of CPA firm I worked with.
After I sold the company to a national organisation they pointed out years of mistakes that I was making and that my novice accountant was making because my company simply outgrew him. My advice to fellow businessman and entrepreneurs is to not be cheap with selecting a CPA to work with.
Preparation at tax time happens year round with monthly profit and loss statements and quarterly meetings with your CPA to make adjustments and to make sure that you capturing all of the deductions that your business is entitled to.
Rushing at the last minute to get all of your tax preparations in order is like cramming for an exam the night before back in your college days. Sound tax preparation happens all your long.
Jessie Seaman – Tax Defense Network – Legal Tax Advice
Preparing for the end of your business tax year can be stressful, particularly if you’re not prepared. Your best course of action may be to lean on a tax professional, who has the expertise to do it right. Jessie Seaman, Esq., a Managing Licensed Tax Professional for Tax Defense Network, LLC, has extensive experience advising small business owners and helping to resolve their tax concerns. She shares her suggestions on how to streamline your approach to handling business taxes:
Hire a professional to prepare your tax returns for the first year or two, or until you are comfortable preparing them on your own. This is the number one mistake that gets businesses in so much trouble; by the time they find out or realise a problem exists, it is too late. At a minimum, hire a professional the first year so they can educate you on what expenses are allowable, how to categorise them, what to depreciate and how quickly, and advise you on common credits you may be eligible for.
If you start out doing things incorrectly, your foundation will corrupt and crumble the following years. If the IRS conducts an audit, they will look at the last three years…which could lead to a massive tax bill, tax liens, etc.
Invest in Quickbooks, Quicken, or some other professional tax software. The programmes have been tested and improved for years and years; they make it easy to keep records organised and give you the ability to see your income patterns, fluctuation of expenses, cash flow, and other business patterns. One click of a button and a business owner may view all account receivables and payable for the week, month, or year.
If you cannot see the big picture of your business activity then it is impossible to cut costs were possible, tap into ‘untapped markets’, improve your business plan, and conduct annual internal audits.
Emma Loughlin – E Business Works – PR & Communication Experts
Xero! Xero is a cloud book-keeping and accounts management system that has simplified the whole process of what I need to do with regards to my business financial records and has made life so much easier.
I was never any good at ‘keeping on top’ of business finances – which usually involved all receipts and invoices being thrown into a folder and then trying to add all of this into a spreadsheet once or twice a year which often resulted in a mega rush at the year end. Not anymore!
Xero allows us to have constant access to real-time results and means that administering the business finances is simple. It links to my business accounts so that transactions are automatically pulled through and matched where possible. Paper records are a thing of the past – I take photos of receipts and link them to the transaction and I can instantly forget about them. Apps are integrated and allow me to enter mileage etc immediately after each trip.
It then allows my accountants, Progression Accountancy, instant access to everything they need and they are able to advise as we go throughout the year. It also ensures a smooth end of tax year when they come to complete my year-end accounts, self-assessment tax return, and all company returns.
Louie Balasny – Botkeeper – Customised Bookkeeping Software
Really, the preparation for yearend taxes should be on an ongoing basis. Specifically, the bookkeeping, as it is the lifeline of your business. Typically, companies wait to do everything just before deadline because they’re preoccupied in running their businesses. This creates more work for the accountant they end up using who is also trying to juggle multiple client relationships and creates lag. Lag can destroy companies and having up to date information once a year is not the proper way to be running a company.
Zondra Wilson CEO – Blu Skin Care – Skincare Products
Blu prepares for the tax year by using Quickbooks. Quickbooks allows my accountant to log among other things sales, returns and itemised deductions into one simple place. Quickbooks places all of this information into the respected schedules so at the end of the year, all I have to do is pull up the schedule information…fill in the information on my tax form and it’s done. This is a great programme for any business to have.