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Preparing For Year End- Some Useful Advice
DBASS Blog | November 2021
As financial year end approaches once again, DBASS understand that it can be a stressful time for many business owners and so would like to offer a few tips to ease the pressure on your business.
At the end of each financial year end, financial statements need to be prepared and submitted to the Companies Registration Office(CRO).
The financial year end is different for all companies in Ireland and does not necessarily correspond with the calendar year. Your first accounting period begins as soon as the company is incorporated, and it usually ends 18 months after incorporation. Each subsequent accounting period is 12 months after that unless it is changed. Accounting year ends can be changed to suit your business, and if this is something you would like to consider please speak to a member of the DBASS team who will discuss the rules which must be adhered to in relation to this.
In advance of year end one of the most important things to do is to book a stock-take, whether it is done internally or externally. All stock needs to be counted on the day of the year end and the cut off is set. This stock will then need to be costed and posted to your accounting package or else shared with your accountant who will then process it. Likewise any work in progress needs to be assessed and costed at the year end.
It is very important that the stock is valued at the lower of cost or net realisable value. The list of stock should be reviewed to see if it is in a saleable condition. If it is worth less than you paid for it then it has to be valued accordingly. Likewise any work in progress needs to be assessed and costed at the year end.
After this I would advise printing a Trial Balance from your accounting software and going through each line item. Query each line item as you go along. Pay particular attention to the following:
- STOCK:
Post closing stock / work in progress as discussed above.
- EXPENSES:
Check all expenses are posted. Expenses must be wholly and exclusively for the purpose of the business to be deductible. Do any staff expenses need to be posted? Make sure you have back up documentation to vouch all expenses.
- SALARY & WAGES
Have all salary and wage payments been posted including taxes paid? Now is the time to decide if tax free vouchers should be given to staff. Up to €500 in vouchers can be given to each member tax free, this is also an allowable deduction for corporation tax purposes. Any pension contributions should also be paid by the year end.
- FIXED ASSETS
Were any fixed assets bought or sold during the year and if so, how were they financed? Keep copies of any related invoices, registration papers, leases and hire purchase agreements as these will be needed for the accounts.
- DEBTORS
Print a list of Trade Debtors (customers) at the year end and make sure you agree to these balances. Any negative balances should be queried, were invoices missing or did the customer overpay?
- CREDITORS
Print a list of Trade Creditors (suppliers) at the year end and agree them back to the suppliers’ statements. Any differences between what your systems says you owe a supplier against what their statement says should be documented and given to us. Also, any negative balances should be queried to make sure all invoices are posted. You need to get statements for all supplier balances at the year end.
- BANK
All bank accounts need to be reconciled up to the year end date. Before each year end, Dbass will send a letter to you for signing, which is then sent to the bank to confirm your balances at the year end.
- KNOW YOUR DEADLINES
You need to know your Annual Return Date with the CRO and your corporation tax deadline. If you need these dates clarified please contact a member of our team. One of the most fundamental accounting principles is Timeliness. Financial Statements must be available in time to make business decisions. Therefore, it is important that financial statements and reports prepared by DBASS, are ready as soon as possible after the year end.
When DBASS request your books and records to prepare your Financial Statements, we attach a customized Schedule of Information of what we require. This can be used as your checklist to make sure you have everything in order for accounts to be prepared.
We are here to help you through the year end process so as always please do not hesitate to contact us on 01 849 88 00 or info@dbass.ie if you have any questions or concerns.
by Susan Clegg, DBASS Chartered Accountants.
Disclaimer notice
This article is for discussion purposes only. For further information on any of the topics covered in this article please contact a DBASS adviser on ph. 01 849 88 00.