March is the chosen financial year end for more than 60% of our bookkeeping clients, whether they are a sole trader or a limited company. So in April and May we are completing March and April bookkeeping for our bookkeeping clients, completing their VAT returns and finalising their accounts to hand over to their accountant.
This year, despite the additional workload created by COVID-19, 25% of our completed March year end accounts were with the accountant by the end of the 2nd week in April and we are on track to have completed 90% by the end of May. This can, of course, only happen when clients provide their paperwork regularly and promptly after the end of each month and respond quickly to any queries we have.
Whilst we keep the accounts up to date throughout the year and complete monthly or quarterly VAT returns for most of them, at year end I review the accounts for all our clients. Whilst I trust the work our bookkeeping team do I feel it is important to have a full check of the accounts before they are finalised. It gives me an overview of the accounts and keeps me up to date with what is happening in our clients' businesses. In addition to ensuring transactions are consistently recorded, I check that the VAT treatment is correct. I check bank account balances, reconcile control accounts such as wages, PAYE, pension liability, loan accounts, accruals, prepayments and VAT balances and review debtors and creditors to ensure there are no old debts which have been overlooked. There will be transactions I will discuss with the bookkeeper responsible for those accounts and will make a note to have a discussion with the client about anything which I feel would be helpful to them or which I need to highlight to them.
Our year end review is very thorough and we prepare notes for the accountant to inform them of any information we feel they should be aware of. Those notes and our reconciliations often prove very useful to us during the year and at the next year end.
However we don't just do these reviews at year end; we carry out reconciliations of all control accounts each time a period of bookkeeping is complete whether monthly or quarterly. We review debtors and creditors and advise our clients of anything we feel they should be aware of. Our role as bookkeepers is far more than just entering information. We ask questions and we give information whether that is about a forgotten PAYE payment, an extra direct debit taken by the insurance company or an over-payment to an employee.
Being able to complete the year end accounts quite quickly after the March accounts are complete means that the accountant is not receiving them to work on very close to the deadlines for submission of returns. It hopefully means that accounts are turned around more quickly and business owners will know their tax liabilities well in advance of the payment date.
If you find that you have very little time between knowing your tax liability and having to pay it then you should consider the following:
- Keep your accounts up to date - monthly is much easier than quarterly as there will be less paperwork to find
- Use accounting software to make it easier to manage - if you need help to start using it invest in some training as a couple of hours may be all you need
- If you have insufficient time or inclination to keep your accounts up to date outsource to a good bookkeeper and provide them with the information they need promptly
- Ask your accountant for a date that they can complete your final accounts or tax return by that will give you enough time to plan for your tax payment/s. If they don't have a deadline your accounts may end up being pushed down the line behind those others who have set a deadline.
If you have a March year end and have been considering using or changing accounting software, now is the time to put this in place to keep your accounts up to date throughout the year. And if you have decided to outsource some or all of your bookkeeping for greater efficiency choose a good bookkeeper who knows what they are doing and can give you the support you need.