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Tax Saving Tips At the Year End

Tax Saving Tips at the Year End

06/08/2019Tax Saving Tips

Before you know it, the time for year-end tax will be right around the corner. It can get stressful to try and get everything in order, but there is good news for you! You don’t have to lose your mind trying to end on a high! Head to your accountant right away and talk about the different ways you can complete in a fiscal high. With this, your year-end tax process will be smooth sails.

 

6 Tax Saving Tips At the Year End

Read on to learn the steps to create a smooth year-end tax process experience

 

Delay Income

Not many know this, but if a cash basis taxpayer receives any income before December 31, it is counted to that same year’s salary. With that knowledge, why not delay the act of receiving it? Delay that income and receive it on January 1 the following year. Depending on how much you’ve gained, you can save quite a bit of money with this method.

 

Analyze Financial Reports

Make sure you know how well your business did. Keeping the books up-to-date and as accurate as possible ensures that you will make the best, most precise decision possible. This will also help you set clear goals for the next year. If you don’t know what’s going on or unsure of what the numbers mean, ask your accountant or bookkeeper. They will run you through it and explain what the numbers mean.

 

Check Inventory

Keep an eye on your inventory. If it has decreased in market value, then you’re in luck! Depending on what is going on, you may be able to apply extra deductions for the current year. This method will depend on the practices of accounting used by your business. Consult your accountant once again for any advice to carry out these necessary actions.

 

Buy Right Away

If you need to buy anything for your business, buy it right now. The more you spend, the more deductions you can make. Do you find the need to buy more office supplies? Go out and purchase pens, pencils, erasures, papers, and other office supplies. Upgrade an old laptop if you have found one. Pay in advance for anything if you can. Talk to your accountant and create a list of what you can buy now to add to deductions.

 

Contribute to Charity

Offering to charity does not only help add even more deductions to the year, but it also boosts your company’s reputation, resulting in a win-win situation. You don’t have to donate raw cash. You can donate supplies, clothes, toys, and other items. Make sure you have all the proper documents and receipts as proof to your donation and purchases.

 

Start Next Year, Now

Don’t start when the fiscal year is about to end. Start right away, because the earlier you begin preparations, the smoother the year-end tax process becomes.

Work together with your accountant and pump out creative ways to add even more deductions. Make sure to address whatever they need and ask whatever you want to know. The last thing you want is a miscommunication that may end up putting your company into unnecessary trouble.

 

CruseBurke specializes in accounting for small businesses, get in touch today to see how we can help.

   

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5 Common Mistakes When Calculating Business Profits

06/08/2019Accounting Issues , Misc

Avoiding Common Errors When Computing Business Profits HMRC produce a range of Toolkits for agents, which highlight errors commonly made in returns so that agents can take steps to avoid them. The business profits toolkit provides guidance on Common Mistakes When Calculating Business Profits for small and medium-sized businesses. They are helpful to anyone computing taxable business profits.   Risk Area 1 – Recordkeeping Good record-keeping is essential for business profits to be calculated correctly. Poor records may result in sales or allowable expenditure being omitted from the accounts, with the result that the level of profit or loss is incorrect.   Risk Area 2 – Business Income The profit or loss will only be correct if all income is included in the accounts. Unless the business is an unincorporated business that has opted to use the cash basis, business income should be included on an accruals basis, matching the income to the period in which it was earned. Not all sources of business income will be immediately obvious – the income of the business may, for example, include scrap sales, contra sales, or barter arrangements. Cash sales may also be overlooked.   Risk Area 3 – Expenditure To ensure that the profit is not overstated, all allowable expenditures should be taken into account. However, a deduction is only permitted for expenses that are wholly and exclusively incurred for the purposes of the business. Attention should also be paid to specific prohibitions, such as for business entertaining. Purchases and expenses should be reviewed to ensure that they have been included. Sole traders and partnerships comprising individuals can use simplified expenses rather than claiming actual expenses.   Risk Area 4 – Stock and Work in Progress Where the business is one that holds stock, care must be taken to include it at the correct value – this is the lower of cost and net realizable value. Errors will arise if stock is overlooked or valued incorrectly. Work-in-progress can be a complex area and advice should be taken to ensure that the treatment is correct.   Risk Area 5 – Miscellaneous Items Miscellaneous areas should also be considered. These may include a review of post-balance sheet events and consideration as to whether any adjustment to the accounts is required. Staff costs should also be reviewed and the amount unpaid nine months after the end of the period should be added back. As far as directors are concerned, consideration should be given to the date on which amounts are credited to the director’s loan account.   Additional Info: HMRC’s Business Profits Toolkit – see www.gov.uk/government/publications/hmrc-business-profits-toolkit.

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