With all the New Year’s resolutions that we make as individuals, it can be easy to overlook changes that may benefit your business coming into the new year.
To get your business off to the best start in 2019, we’ve come up with our top 5 resolutions for your business accounting.
Review End of Year Financials to Plan for the New Year
A year-end financial review is the best way of producing a true picture of your business finances. Throughout the review, take note of stock, budgets, staff and their wages, any taxes paid and how they may change in the new year. Also be mindful of any new or upcoming industry changes that may impact profitability.
Once you’ve properly reviewed your business’s financial performance over the past year, you’ll be able to set more realistic goals and budgets for the upcoming year. You may also find that areas of your business that you thought were performing well financially, are in fact falling behind. Insights like this can help you better allocate budgets and time to different areas of the business going forward.
Review The Structure of Your Business
As businesses grow and evolve, it can be that the structure they first adopted is not the best fit for them anymore. Choosing the optimal structure for your business may aid growth and make you eligible for certain benefits, on the other hand, constricting yourself to a business structure that’s not the right fit can have a number of disadvantages.
If you’ve experienced rapid growth, seen significantly higher earnings or hired/lost several employees throughout the year, it could be time for a review. Take a look at our blog on choosing the right legal structure for your business for more advice on the different structures and their benefits and drawbacks.
Ensure Compliance With Upcoming Legislation
Ensuring compliance with legislation is paramount for business success, equally as important is preparing for any upcoming changes to avoid fines for non-compliance. Two of the biggest changes for businesses throughout the last year were:
General Data Protection Regulation (GDPR) – Despite being introduced in May 2018, many businesses are still not fully compliant with GDPR. Whilst larger corporations are likely to be inspected for non-compliance first, the failure for non-compliance is up to 4% of annual global turnover, so businesses of all sizes should ensure they have measures in place to avoid being in breach of the regulations.
Remember, it is just as important to ensure that your suppliers are compliant with GDPR, as all your internal GDPR measures can be undone through poor data protection from one of your suppliers. Find out more about the importance of ensuring GDPR compliance with your accountant.
Making Tax Digital (MTD) – MTD is perhaps the biggest change that will impact the majority of businesses across the UK. The next significant change comes in April 2019, where businesses with a taxable turnover of over £85,000 will need to keep VAT records digitally.
We recommend checking in with your in-house team or accountant to ensure that they are prepared for these changes. Equally important is reviewing your accounting software (if applicable), as not all platforms are suitable for MTD – you can find a list of approved software here.
Reduce the Number of Outstanding Invoices
When carrying out your end of year financial review, you may find that the number of invoices outstanding is impacting the profitability of your business. Here are a few methods of getting invoices paid faster in the new year without rupturing relationships with customers:
- Consider asking for payment upfront.
- Invoice your clients quickly – if they have to wait for you then why shouldn’t you have to wait for them?
- Migrate customers from POs and cheques to online invoicing.
- Ensure clients understand your payment terms when signing their contract.
- Send automated payment reminders to ensure customers are aware of what’s outstanding.
- Instead of charging fees for late payment, offer a marginal discount for invoices paid early or on time.
- Make being paid easy by offering a range of platforms for payment.
- Use an accountant.
Consider Outsourcing your Accounting
Outsourcing your accounting can save you time and money. As well as minimising mistakes and reducing the risk of non-compliance, an accountant can improve efficiency and help maximise your business’s value. If you want to find out more about how outsourcing your accounting could benefit your business this year, call us today on 0117 379 0810.
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This post was written by Steph Roffey