The start of a new year, whether it’s a calendar, financial, or tax year, is a natural point to reflect on what your business has achieved so far, and plan what will happen next. It’s the ideal time to take stock (sometimes literally!) and prepare your business for the next 12-month cycle.

Our team of accountants have put together a checklist of key things to think about so you can start the new year in the best way possible.

First thing’s first: Make sure all your financial records are accurate, complete, and up-to-date. This includes income and expense statements, receipts, invoices, and bank statements.

The best way to manage your bookkeeping (other than ‘as often as possible’) is with a methodical, well-organised accounting system. It’s best to go for accounting software that meets the specific needs of your business, which might entail features for invoicing, banking, expense tracking, and financial reporting (sometimes known as management accounts).

Categorising transactions accurately will help you understand where money really goes in your business, so you can see what’s performing well, and identify areas which might need more attention.

Your business structure is important because it affects how your business should be treated legally as well as how it is organised and operated. It describes the relationships among individuals involved, including owners, shareholders and managers, and determines how responsibilities, liabilities and profits should be distributed.

 
Consider whether your current business structure is still the most tax-efficient option. Changes in your business or personal circumstances may mean it’s time to re-evaluate.

Understanding what tax deductions, allowances and reliefs your business can claim could make a massive difference financially. This might include tax relief on travel expenses or R&D costs for example.

Seeing what help is available might open up new opportunities for your business, and puts more money back in your pocket for reinvestment, expansion or other strategic initiatives.

And of course, staying compliant with tax regulations reduces the risk of penalties and unwanted attention from HMRC. A regular tax efficiency review with your accountant is a great place to start.

Review capital allowances

Capital allowances are tax deductions that businesses can claim on some expenditure, like machinery, equipment, and vehicles. This then works to reduce their taxable profits and therefore their tax bill.

Capital allowances represent the wear and tear or depreciation of qualifying assets over time. The goal is to encourage businesses to invest in assets that contribute to business growth and productivity.

Think about any investments your business made during the year and whether they might be eligible for capital allowances (this is something your accountant can help you with!).
 

Check that your payroll records are accurate. This includes employee details, salary information and any changes in tax codes. Be aware of any changes in National Insurance contributions or other relevant regulations as well, such as minimum pay!

For some businesses, the end of a year also means the end of a reporting period, so double-check which tax reporting deadlines apply to you!

Value Added Tax (VAT) is a consumption tax payable on the value added to goods and services at each stage of production and distribution. The standard rate of VAT in the UK is a percentage of the final selling price and is currently set at 20%.

If your business is VAT registered, check that your VAT records are accurate and up-to-date. You may even be able to reclaim your VAT in certain circumstances. Make sure you know about any changes in VAT rates or rules that may affect your business too.

Some businesses also find it useful to register for VAT voluntarily, if this helps them be more tax efficient.

Stay informed about changes in legislation

Regularly check for updates and changes in tax legislation. The government may introduce new policies or amend existing ones, which could have an impact on your business.

To do this, regularly check official government websites such as Gov.uk for updates and subscribe to reputable business news outlets that cover legal and regulatory changes in your area and in your industry. Additionally, think about joining industry associations or chambers of commerce, as they often give timely updates and resources when regulations change.

Review pension contributions for yourself and your employees. Making pension contributions can often have tax advantages, so it’s worth getting clued up and making an informed decision.

 
Need a new year spring clean of your business finances? Whatever your tax or accounting issue, we’re here to help. Take a look at our wide range of great value online accounting services or give our friendly expert team a call on 020 3355 4047. You can also grab an instant quote online.