For many business owners, August brings a welcome pause. With clients on holiday and workloads a little lighter, it’s the perfect time to do a financial health check. Rather than let the summer drift by, use this quieter period to get your business financially organised. By doing so you can enter the final quarter of the year feeling confident and in control.
Here are seven essential financial checks to tackle this August:
- Review your year-to-date profit and loss
Start by looking at your profit and loss report. Are you on track with revenue targets? Have certain costs crept up unexpectedly? Perhaps you’ve had a strong few months and need to adjust forecasts accordingly. Look for trends, they could be good or bad and take note of anything that requires attention. This is your opportunity to make adjustment before Q4 kicks in.
- Check your directors’ loan account
If you’ve borrowed from the company or made personal purchases through the business, your Director’s Loan Account might be growing quietly in the background. Make sure you’re not accidentally racking up a tax liability. Also, be aware that if you’re repaying too slowly, put a plan in place to clear it before year-end.
- Reconcile bank accounts and credit cards
It’s easy for transactions to go unmatched, especially if you have income from various sources. Reconciling everything now ensures your books are accurate, your reports are meaningful, and any accounting software is correct. This also helps reduce the risk of errors come year-end.
- Review your VAT position
If you’re VAT-registered, take a moment to check how prepared you are for your next return. Could you benefit from switching to the Flat Rate or Cash Accounting scheme? It’s worth evaluating as the right scheme could improve your cash flow and reduce your administration needs.
- Run a corporation tax estimate
Use your current profit figure to estimate Corporation Tax. This is especially helpful if you use a system like Profit First, where you allocate funds throughout the year. Starting now means no nasty surprises later and a smoother path to April.
- Clean up your balance sheet
Look at outstanding invoices, lingering liabilities, and unexplained transactions. Is everything up to date? August is ideal for clearing out old clutter, so your accounts reflect the true state of the business.
- Revisit your payroll or dividend strategy
Is your current salary and dividend split, still the most tax-efficient option? Depending on how profits are shaping up, it might be worth adjusting your strategy to maximise tax savings before the new financial year begins.
So, the takeaway from reading this should be to use August as a press pause, check in, and tidy up. A little mid-year maintenance now will pay dividends (literally!) come year-end.
If you need some help, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 20-minute call with Yarka – https://calendly.com/yarka-ssa/20min
