EOW Reflections: Start of new tax year
When the clock strikes midnight tonight (5 April), the 2023/24 tax year will end and the new tax year (2024/25) begins. There will follow, as day follows night, changes to bills and tax, the energy price cap drops and state pension rises. It’s worth checking on gov.uk to see what affects you.
The last day of the old tax year is popular for making resolutions. I am cynical. I admit it. So when I saw research from QuickBooks showing that potential customers are planning to take actions, that could increase their sales, my inner cynic yelled ‘sales pitch’. But I suspect this research is pretty accurate. Small businesses do resolve at the end of one tax year to do things differently in the new tax year. I know I did. However, in my case resolving to make changes didn’t often result in action.
According to QuickBooks:
- 52% will start using AI to make the tax year more efficient
- 50% plan to find ways to reduce tax liabilities in compliance with all laws and regulations
- 48% plan to upgrade their financial management systems
- 44% will pay closer attention to potential tax rebates
- 41% will hire an accountant or tax advisor
The beginning of the tax year is a great point to take stock and think about steps to achieve better financial management in a business. But if the list were turned upside down and the right accountant brought on board first, all the other changes are more likely to follow and be more effective.
Finding the right accountant for your business can be a game changer. S/he can help you think strategically about your business needs and how to get from where you are to where you want to be. The right accountant is a business adviser rather than just someone to make sure you’re tax compliant. You may be thinking your only choice is to make cuts, while the accountant may see alternatives that could increase productivity and growth. In these uncertain times leading up to an election many businesses are reporting plans to delay investment decisions. Above all businesses thrive on certainty, but this may not be the time to delay investment. The right accountant could help you to see the wood for the trees.
When you run a small business, you wear all the hats. In my experience that means the paperwork goes to the bottom of the list, but being able to see on a day-by-day, week-by-week basis where the money is in your business is the most important thing. You may think that an accountant is just another business cost you can’t afford but before the clock strikes midnight resolve to look at the difference an astute business adviser could make to your business. Perhaps you can’t afford not to hire one. If nothing else they can take away some of the paperwork and give you the space to do the creative thinking, planning and innovation that was why you wanted to work for yourself in the first place.
PS: I’ve become hardened to big companies offering suppliers long payment terms in contracts, on a ‘take it or leave it’ basis, but I was shocked to hear yesterday of a supplier being told payment terms for a particular contract would be 365 days. I’d love to talk to you if you think 365 day payment terms are fair. I hope that supplier turned down your kind offer, left you looking for a new one and switched to supplying your better paying competition. I hope your Board members are horrified, and your potential investors, talented employees and customers all look elsewhere for ethical firms to work with. If you’re holding payments back for 365 days, there’s a good chance you’re in financial trouble or soon will be. Resolve to improve your payment practices or you may have no business by the end of the new tax year.