Are you fully prepared for your financial year-end?
For small business owners, scheduling a pre-year-end meeting with your accountant or tax adviser is one of the smartest moves you can make to stay ahead.
This is your opportunity to make proactive decisions that can save money, improve cash flow, and set your business up for success in the coming year.
A pre-year-end meeting is all about taking stock of your financial position before the year closes, giving you time to make adjustments and ensure your business is in the best possible shape for tax efficiency and growth.
The meeting should focus on three key areas:
- Tax planning: Ensuring you minimise tax liabilities while staying compliant with HMRC.
- Cash flow and investment decisions: Making decisions that align with your long-term goals.
- Strategic insights: Identifying risks and opportunities for growth before it’s too late to act.
Benefits of a pre-year-end meeting
1. Proactive Tax Savings
Your accountant can identify strategies to reduce your tax bills whilst remaining compliant with the relevant laws and regulations.
This might include:
- Claiming capital allowances: If you’re planning to buy equipment, machinery, or vehicles, purchasing them before the year-end could maximise tax relief through the Annual Investment Allowance (AIA).
- Optimising directors’ remuneration: Your adviser can help you decide whether to pay yourself through dividends, salary, or a combination, ensuring it’s tax-efficient.
- Using allowances effectively: Have you used your personal allowance, R&D tax reliefs, or other deductions? Your accountant can help ensure no opportunities are missed.
Example:
A small manufacturing business realised during their pre-year-end meeting that purchasing a new machine before the year-end would qualify for AIA, saving them £5,000 in tax that would otherwise have been payable.
2. Avoiding unnecessary tax surprises
Pre-year-end meetings allow you to forecast your tax liabilities and set aside funds to meet them, avoiding last-minute cash flow headaches.
Example:
A growing e-commerce SME had a sudden increase in turnover but hadn’t realised they’d breached the VAT registration threshold.
During their pre-year-end meeting, the accountant identified this, registered them for VAT, and helped them adjust their pricing to cover the additional VAT costs.
3. Planning for dividend payments or bonuses
If your business has profits to distribute, you’ll need to decide whether to issue dividends, reinvest, or pay bonuses.
Doing this before year-end allows time to calculate the most tax-efficient strategy.
Example:
A tech startup was considering reinvesting their profits into the business but hadn’t factored in upcoming Corporation Tax.
Their accountant showed how splitting the funds between a dividend and reinvestment could minimise their tax exposure.
4. Managing pension contributions
Making pension contributions before year-end can reduce taxable profits while building your long-term wealth.
Your accountant can help determine the optimal level of contributions based on your business’s financial position.
5. Reviewing losses or gains
If your business has made a profit or a loss, a pre-year-end meeting allows time to plan how to use those efficiently.
- Losses can often be carried back to offset profits in prior years, generating a tax refund.
- If you’re considering selling an asset, it might be worth timing the sale to make use of capital gains tax allowances.
Example:
A retail sole trader planned to sell a property, but during their pre-year-end meeting, their accountant advised waiting until the new tax year to make use of the following year’s capital gains tax allowance, saving £3,000 and delaying the tax due date.
How to prepare for a pre-year-end meeting
The most common decisions we see being made in year-end meetings are as follows:
- Timing of major purchases or investments.
- Optimal salary/dividend mix for directors.
- Pension contributions for tax relief.
- Whether to make additional payments to reduce corporation tax.
- VAT planning and compliance checks.
- Use of tax reliefs, like R&D tax credits.
As you can see, a pre-year-end meeting isn’t just about ticking a compliance box – it’s about putting you in control of your business’s financial future.
To make the most of your meeting:
- Bring up-to-date management accounts and forecasts.
- Be clear about your business goals (e.g., growth, cost-saving, or reinvestment).
- List any major financial decisions you’re considering (e.g., buying assets, hiring staff, or taking out loans).
Your accountant or tax adviser can ensure you’re making the best decisions for your business before the year is over so don’t delay in getting a meeting booked in!
