End of year questions

[Rich23]

When I started my newsagents in October last year I put down 5th April as the year end to keep it with the financial year.

So technically tomorow is the last day. I cannot afford to close on Thursday for a stock take and I notice that my employees wages year ended last week.

With regards to the first problem how should I proceed please? Is it Ok to do it Sunday when we are closed anyway and estimate back to the end of Wednesday the 5th?

With regards to the employees when do I change over their tax codes and date their end of year totals? Should it be the end of week 52- last week- or tomorrow night?

Cheers and thanks for any advice.

Rich

[Hayles]

Hi Rich

Sorry, can't offer any advice but surely your accountant should be advising you on this?

My wonderful accountant (Alpha from this forum), would be if I was in your position I'm sure.

Don't worry though, someone will be along with your answers soon enough.

Hayles

[Jayne]

Do you have an accountant?

I thought your tax year started the day you opened your shop. When I opened my shop it was 4th Feb, that was my week one, my last week would be week 52 around 4th Feb the year after.

When it came to my next years books, I just carried them on from week 52, but in stead of week 53 that would be week 1. I never did a stock check either for my year end books, i'm not sure on a Newsagents though.

You really need to get advice from a good accountant. Alpha or Joy on here are both tops.

Jayne :D

[Alpha]

Rich

When I started my newsagents in October last year I put down 5th April as the year end to keep it with the financial year.

So technically tomorow is the last day.

Working on the assumption that you are using self assessment you can choose when your year end will be so if you wish it to be for example at the end of April then you can produce accounts up to the end of April. You/accountant will in the first year need to produce a set of accounts or estimate to go on the first self assessment return to cover from the date you started until the end of the tax year.
Next year for your self assessment return you would then use accounts ending during the tax year 6/04/06 to 5/04/07 if you think that profits will be lower in the first year there may be some advantage in having your accounting year end sometime in this period eg Sept 2006 rather than 5/04/06 as the lower profits will be used for the computation for this year and next.


With regards to the employees when do I change over their tax codes and date their end of year totals? Should it be the end of week 52- last week- or tomorrow night?

You should complete the year to week 52 and then apply the tax code changes so that they take effect in week 1.

It is always best to check these things out with your accountant/payroll specialist. If you do not have one I would really advise you to get one.

There are some very good accountants on these forums such as Joyous who can work with you remotely.

[Joyous]

It’s quite common for businesses to do their stock take at a convenient point after their year end and then estimate it back to their year end date. There’s no problem with what you propose but obviously the sooner you do it the more accurate it will be.

Regarding your employees the new tax codes are for the first pay day after 6 April. You date their year end totals to the last pay day in 2005-06.

Regards

Joy

[Rich23]

Many thanks all

I chose the 5th April as I had been told elsewhere and read that if I ran the business from its start date for one year before doing the year end I'd end up paying more tax and then this wouldn't be recouped until the final year of trading.

I thought that by doing it this way I could take enough drawings to cover my allowance and the 10% allowance (and so could my partner) and the remaining money we could leave in as part of the capital the business owes us. That means next year we can draw the minimum wages possible and take the rest out as our original capital investment keeping the tax low for that year too.

The stocktake and employee situation is fine and what I guessed.

I have an accountant in principle but am trying to use them as little as possible this first year because things are just so tight. I am seeing them on the 18th to make sure my books are OK etc and my car allowances and equipment have been done properly but I just ddin't want to leave things at this point if I needed to do something more now.

As I am OK I think I should be fine on this point now.

Many thanks for all your advice

Rich

[Joyous]

I chose the 5th April as I had been told elsewhere and read that if I ran the business from its start date for one year before doing the year end I'd end up paying more tax and then this wouldn't be recouped until the final year of trading.

Hmm, I’ve given up trying to get my head around that one.

When deciding on a year end date the general rule of thumb is that if profits are rising, e.g. £5k in year 1, £10k in year 2 and so on, pick a date early in the tax year such as 30th April. This delays the time when the higher profits become assessable for tax.

Might be worth having a word with your accountant about this when you go to see him.

Regards

Joy

[Joyous]

I thought your tax year started the day you opened your shop. When I opened my shop it was 4th Feb, that was my week one, my last week would be week 52 around 4th Feb the year after.
Jayne

Your year end date is any date of your choosing and doesn’t have to bear any relation to the date you started trading.

Weeks 1 to 52 are only relevant for payroll purposes. Week 1 always starts on 6th April and so in most cases will not coincide with your first week of trading.

Regards

Joy

Alpha or Joy on here are both tops.

Aah, thanks Jayne (she says grinning from ear to ear :D )