With FY’18-19 ending, it’s time for businesses to tally their accounts and consolidate their financial information for the year. Comprising details of company assets, liabilities, total debt, equity capital, profit/loss etc., for the past need utmost care & prudence. These records are important for tax calculation, archiving and for compliance check & audit in the future.
A lot of small businesses in India rely on the traditional bookkeeping method of using pen, papers & registers, to maintain financial records. This method makes it awfully difficult for an accountant as he/she has to sieve through multiple manual entries, and assess every invoice generated and cumulate all this information in a discernible way.
If the accountant feels troubled by all of this effort, it’s unlikely he’ll leave the business owner in peace.
List of things Small Business Owners Should Do Before Financial Year-End:
1. Go Digital with Accounting Software
Instead of relying on manual methods, it’s high time you migrate to digital accounting solutions. Accounting software allows you to maintain a digital repository of financial transactions, which is secured with high grade encryption. You can scan and store invoices, each of which is linked to a corresponding transactional update.
Balance sheet creation and tax calculations, especially at this time of the year, is particularly easy with an accounting solution. They come with pre-defined templates for you to create records as per your need.
Such software makes it easy to cumulate and access your financial records, stay updated on compliance requirements and stay confident in your data’s longevity. You’ll also end up saving physical space, as you’ll not be required to maintain dusty old files stacked in your cupboard.
2. Compile & Create Your Financial Statements in Time
To comply with statutory & income department requirements, you’ll have to create different reports highlighting profit & loss, earnings & deductions, total income, etc. Preparing these statements in advance will help you stay on track & won’t lead to a rushed & botched job. Making them in advance will also ensure that you’ve enough time to make corrections and additions, without compromising a report’s integrity.
After all, a stitch in time saves nine.
3. Consider Handing Out Year-End Bonuses
If you’ve had a successful business year, it’s advisable to show your team some appreciation through bonuses. Determine the amount you can afford to hand out bonuses based on performance and other factors. Appreciative gestures like this will boost employee morale and drive them to perform better. Performing employees translate to a better business, so it’s a win-win situation for everyone.
4. Donate to Social Causes & Charities
Donating to charities and getting involved in social activities are viable tax saving techniques. You’ll save a good chunk of your finances by supporting such causes & you can make it a recurring thing. Plus, such activities are good PR for your company and will help you gain visibility & applaud from your stakeholders and customers. They are also very feel-good activities so if you need a bolt of happiness in your life, this is a good way to do so.
5. Plan for The Future
The end of a financial year & the beginning of a new one, is the best time to assess where your company stands business-wise and what can be done to improve its state. Talk to your finance team and discuss your company’s financial standing at the end of the year and set goals for the next year. If you don’t have a finance team/accountant and manage it on your own, assess where you wish to see your company this time next year. Plan your company’s finances and explore ways to maximise profit. If you aren’t technology-reliant, this is a good time to find solutions that are suited to your business requirements. Those will help you improve business functions and reduce your dependency on old-school manual methods.
Don’t let the financial year-end be a period of high stress & misery. Work on the above tips and you’ll see rewards, both in the short & long run.