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Why should you get your accounts done early?

Why should you get your accounts done early?
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    Having the accounts prepared for the business is not at the top of every business owner’s plan. However, staying ahead of deadlines is a powerful tactic that will make you more productive while reducing stress.

    10 reasons why you should do your accounts early

    Getting your accounts done will help immeasurably in achieving your goal of enhanced decision-making and improved business performance.

    Not only these, but there are also countless reasons why you should want your accounts to be done as early as possible. These are some of the advantages of having your business accounts prepared as early as possible.

    In no order, we have listed the top ten reasons below…

    Know your tax liability well in advance

    Depending on your company structure, you may have a Corporation Tax liability proportionate to the profits for the year. Knowing your tax liability prior to the payment deadline puts you in a much stronger position.

    No one looks forward to paying tax; however, knowing how much you need to pay in good time will undoubtedly mean you can plan the payment into your cash flow accordingly.

    By knowing your tax liability in advance, you can plan/enjoy the following:

    • Plan the payment into your cash flow
    • Improve the accuracy of your budgets
    • Start saving to make sure you have the cash to pay it on time
    • Have your accounts available to support mortgage applications/loans
    • Have peace of mind in knowing how much you owe to the taxman
    • Get to know the correct dividend availability

    A better view of the future of the business

    One of the core benefits of completing the account early is planning the future of the business.

    With your reports at your fingertips, you can analyse the performance of your business and make correct decisions about the overall profitability/performance of the company.

    Forecasting and budgeting

    To make accurate budgets and forecasts using the latest financial statements is crucial.

    Sometimes, budgets and forecasts have to be revised following the preparation of the year-end accounts. This will incur an unwanted cost and lead to ill-informed decision-making, which may not be revocable.

    Frees up your time and mind

    When you cut off something from your list, you can also stop thinking about how you will complete it.

    Finishing ahead of due dates frees up your mind and time and avoids the last-minute rush. Many deadlines have a penalty/surcharge attached to them.

    There could be a late payment fee or extra work required if you miss the deadline. So, you have to get these accounts done early to be on the safe side.

    Get the key numbers early

    Clients frequently ask us questions such as, ‘What’s my turnover for the year?‘ or ‘What’s the dividend availability in the company?‘ or ‘What’s my profit for the financial year?‘ but mostly, these queries come at the end of the year when it’s too late to make decisions that will affect these financial results.

    Getting the accounts completed ahead of time gives you back more time, making it possible to make decisions that will change these financial results.

    Some people find it aggravating to have to find the receipts and invoices and send them to the accountant as they think it’ll take too long. Still, it doesn’t take that long, and you can manage this by using the variety of software available in the market.

    Tax Planning

    To reduce business and personal tax liabilities, it is essential to understand the current tax position.

    For example, if the company has made a loss in the current year that will affect the coming year’s tax planning, you can check whether you have missed claiming any allowance for the company for the year.

    Sometimes if you miss a deadline, you don’t get a second chance, and you can’t take advantage of allowances.

    Carry losses back

    Many companies are likely to have made losses during the last year due to reduced consumer spending due to the pandemic. If you are one of these companies, there is still a chance to get tax relief from the government this year.

    You can carry losses back against prior period profits, and if you have already paid your tax liability, you will be entitled to a tax refund. This can help give a much-needed cash flow boost to rebuild/recover your business.

    However, you have to complete the accounts early to check and apply for these schemes as early as possible using the financial results and some key numbers from the financial statements.

    Deal with the unexpected and reduce stress

    Life has a way of throwing the unpredictable. Usually, it happens when the deadline is very close. If you wait until the deadline comes very close, then you won’t have time to react when life throws a curveball.

    And when this happens, you create stress when you don’t meet the deadline. But when you are ahead of schedule and due dates, you can enjoy your work more. So, it’s always best to get your accounts done early and be ready to deal with the unexpected and be stress-free.

    Allows time for a recheck

    If you have ever hurried to finish work, you feel that you aren’t doing your best work; you may even still be working on it just to get it done.

    However, if you finish ahead of a deadline, you will have time to recheck your work and make any corrections and improvements. And also, everyone has a time management reputation. If you don’t do these things on time, you’ll ruin your time management reputation.

    Your accountant will appreciate getting your accounts done early. The accountancy industry has taken quite a lot of responsibility over the last eighteen months to help businesses recover. With lots of new government schemes and allowances, businesses have needed support and financial advice more than ever before.

    Getting your information to your accountant early is much appreciated as it allows them to plan their work, to maintain high standards of service.

    FAQs

    Why do we need to prepare accounts?

    Accounting plays a vital role in running a business because it helps you track income, expense, and profit and provide management, investors and government with quantitative financial information which can be used in making business decisions.

    What is an accounting problem?

    Accounting errors are unintentional bookkeeping errors and are sometimes easy to identify and fix. For example, if the debits and credits don’t add up to the same amount in the trial balance, an accountant can easily see what account is inaccurate.

    What is commerce accounting?

    Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes analysing, summarising, and reporting the numbers.

    What are the most common types of accounting errors, and how do they occur?

    • Error of omission
    • Error of commission
    • Error of transposition
    • Error of duplication
    • Error of principle
    • Error of entry reversal
    • Compensating error
    • Data entry errors

    What are the five types of accounts?

    • Asset
    • Expense
    • Income
    • Liability
    • Equity
    • Income
    • Liability
    • Equity
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