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How can I prepare for my year-end?
Renata Selley writes:
Your ‘year-end’ is the date when your franchise accounting period ends.
Communication is king when it comes to working with your accountant. Let them know when your information will be ready and be sure to supply the data shortly after your year end.
The figures will enable your accountant to produce your end-of-year accounts, also called statutory accounts, which includes a profit and loss that illustrates sales, running costs and the profit or loss made over the financial year.
For limited and LLP businesses, statutory accounts will also include any notes about the accounts, plus a director’s report and balance sheet showing the value of everything the franchise owns, owes and is owed on the last day of the financial year.
Try and respond to any queries raised by your accountant quickly to make the process as smooth and efficient as possible, ensuring the accounts are ready well before the relevant deadlines.
When finalised, your statutory accounts will need to be sent to all shareholders, people who can go to the company’s general meetings, Companies House and HMRC.
In addition, a tax return will also need to be filed with HMRC. The deadline for your tax return is January 31 after the year end for sole traders and partnerships. For limited companies, this is 12 months after the end of the accounting period it covers. There are penalties if your tax return is not filed by the deadline, which increases the later the return is filed.
From a business perspective, the challenge with end-of-year accounts is that, by their very nature, the information contained in them is already a year out of date once it’s finalised. This means that although they’re necessary for legal and taxation purposes, they’re not overly helpful when it comes to making timely business decisions about how best to run your franchise.
One solution is to generate regular management accounts, which are a snapshot of your franchise’s performance usually taken each month.
Careful evaluation of management accounts means you can act quickly to address any shortfall in profits by cutting costs or ramping up marketing. In other words, you can make changes before it’s too late.
If sales one month are really good, you can work out what you did well and replicate this. Similarly, if costs have escalated in another month, you can rapidly reduce expenditure to keep cash flow on an even keel. Keeping a close eye on the numbers in this way can ensure your end-of-year accounts will show a healthier profit overall.
If, like many people, crunching numbers is not one of your strengths, get help from your accountant, who will understand the figures and help put them into perspective.
At d&t, our friendly, experienced accountancy and business planning teams are always happy to advise and help navigate the best way forward for individual franchise owners and franchisors. Our team add value not just numbers and are trusted to provide the most appropriate advice dependent on individual circumstances.
d&t is a multi award-winning team of chartered accountants and expert business advisers to clients in multiple industries, as well as over 100 different franchise networks.
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