A year-end planning checklist for growing businesses

The weeks before your financial year-end are the best time to make decisions that affect your results and your tax bill. Once the year has closed, most of the opportunities have closed with it. This checklist covers the points we review with clients each year.

Before the year closes

• Forecast your profit for the year, so decisions are based on realistic numbers.
• Consider the timing of planned equipment purchases. Capital allowances such as the Annual Investment Allowance can give relief on qualifying spend in the year it is incurred.
• Review employer pension contributions. Relief is given in the period the contribution is paid, not when it is accrued.
• If you plan to pay staff bonuses, note that accrued bonuses are generally deductible only if paid within nine months of the year-end.
• Write off debts that you know will not be recovered.

Directors and shareholders

• Check the balance of any director's loan account. An overdrawn balance not repaid within nine months and one day of the year-end can lead to an additional tax charge for the company.
• Confirm there are enough distributable profits before declaring dividends.
• Review salary and dividend levels for the coming year.

Records and compliance

• Reconcile your bank accounts and clear any unexplained items.
• Count and value stock and work in progress at the year-end date.
• Make sure VAT and payroll records agree with your accounting system.
• Keep invoices and receipts for significant purchases.

Plan your cash for tax

For most small and medium-sized companies, Corporation Tax is due nine months and one day after the end of the accounting period. Setting money aside as the year progresses avoids a cash flow squeeze when the payment falls due.