Many business owners struggle with meeting the deadline for filing their accounts with HMRC. All of this tax compliance seems like a nuisance, really.
Running your business takes most of your time, you struggle to make time for your family and on top of that late filing penalties hit you mercilessly. Or maybe you keep up with the deadline your accountant gives you, but when they notify you of how much tax you have to pay, you feel hit by a hurricane out of the blue.
We recently helped one new customer file their accounts just before the deadline. While we successfully filed on time, this client missed out on the huge value that getting your accounts done early brings. We recommend doing your company accounts as soon after your company year-end as possible for a number of very important reasons.
What do we mean by doing your company accounts as soon after your company year-end? Well, let’s assume your company year-end is on 31 December. After this, you have 9 months and 1 day to pay your tax liability. However, if you don’t know how much tax you need to pay, you may get to that payment deadline and not pay enough tax or not pay at all and incur penalties.
The odd thing is that while you have only 9 months and 1 day to pay your tax, you have one full year to do your accounts and submit them. This is a bit counter-intuitive, because you must pay the correct amount of tax to HMRC before you know what that amount is.
See now why doing your accounts early is important ?
In this article, we have compiled a good few reasons why you should do your accounts early. In fact, ideally your accountant should run a mini-statement of accounts for you every three months, let’s see why:
1. It helps you avoid surprise tax bills
Everyone loves surprises, except when that surprise is a big tax bill !
If you know your tax bill ahead of time, you can start putting money aside to save for it instead of scrambling around at the last minute trying to find the cash you need. Imagine going into tax season feeling completely in control instead of biting your nails over what’s to come!
2. It lets you know how your business is performing
The primary value in getting your accounts done early is getting a clear understanding of how your business is doing. It sounds simple but, quite often, the annual return filing season is the only time you as a business owner get to know how you’re performing. If you’re only getting your hands on these numbers nine months after your year-end, that can be too late.
We recommend completing your accounts as close to your company year-end as possible, preferably within three months. This means that if your company’s year-end is on 31 December, then you should have your accounts done by 31 March of the following year. This can help you see where you’re losing or making money, understand the state of the industry overall and make impactful decisions to drive future success.
3. It saves you time and helps you prevent mistakes
Time is your most valuable and finite resource as a business owner. That’s why you don’t want to waste it scrambling around for receipts and invoices, trying to remember everything that happened all those months ago with a deadline looming nearer and nearer.
Playing catch-up doesn’t just take extra time; it can also lead to errors in your tax return. Mistakes happen when you rush things. You might miss an important entry and end up paying more tax than you need to. If you prepare your accounts well before the deadline, then you can be confident you’re keeping as much of your hard-earned money as possible.
4. It helps you with optimal business planning
Working with target dates rather than deadlines is a brilliant way of staying on top of your numbers.
At LAS Accounting, we work to target dates rather than deadlines. For example, we have target dates of three months from companies’ year-end to get the company accounts done. We know sometimes daily business gets in the way, so having to worry about your numbers can be challenging, to say the least.
However, setting a target date means you can get closer to your numbers and we can bring even more value to your business. And just imagine the relief you’ll feel when that deadline hits and you know everything’s been handled already.
Don’t leave your accounts until the last minute !
How can LAS Accounting help with your accounts ?
LAS Accounting Ltd can help you with each and every one of your accounting needs, saving you time and money to focus on doing what you do best – running and growing your business. We can also help you understand your business finances, monitor your cash balances, plan for future tax liabilities and pinpoint trends to help support important business decisions.
Remember: the path to success is paved in tiny but meaningful steps. If you’d like help with your accounts and corporation tax, now may be the ideal time to engage the services of an accountant to do all the work for you and provide you with all the accounting advice you need.
Don’t hesitate to get in touch for any further enquiries at: firstname.lastname@example.org