The Day of Reckoning

Martz Witty

Head of the Martz Group.

For many businesses, the end of the financial year is looming.

This year may be a little different as Easter falls right at the same time, which could be difficult for year-end stock take, especially if you are in a retail business.

It is the time when the books are reconciled, the results are compared with previous years, the annual tax liability is calculated and the accountant tells you if you have had a good year or not.

Depending on when you get your accounts completed, you may not get this news until next March, as Tax Agents have until 31 March of the following year to file your tax returns. By then you could be another year behind where you thought you should be.

But should the results be a surprise to you?

Assuming you set a financial budget at the start of the previous year and have good, accurate accounting software, you should already know whether you achieved your financial goals or not.

Regular monthly reporting, including actual versus budgeted results, will have given you the opportunity to identify potential threats to your business and make adjustments along the way.

As you were able to estimate your annual profit accurately, you will have paid enough tax during the year as well, so hopefully no paying use of money interest (uomi) to the Inland Revenue Department.

If you didn’t end up where you expected, do you know what went wrong? Have you put steps in place to ensure that the same issues don’t derail your business plans for the next financial year?

Setting a budget now and introducing good management reporting for the next financial year will mean that next year you will be one of the businesses with “no surprises”.

As accountants, we can only recommend that you get your annual financial statements and tax returns completed as soon as possible after the end of the financial year.

This gives your financial advisor the opportunity to make comments on the accuracy of your management reporting, and to assist in setting up financial budgets for the next financial year, so you can ensure that your goals are realised in 2018.

Author: magazinestoday

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