For a business to be successful, keeping accounting and financial records in order is essential. Finance and accounting departments must work together to prepare for tax returns filings and be ready for audit as the calendar year is coming to an end.
For tax and other compliance reasons, every entity is required to report its results annually. The South African Revenue Service (SARS) prescribed tax period for individuals usually ends on the last day of February. However, other corporations can select their financial year ends with some exceptions.
According to the Companies and Intellectual Property Commission (CIPC), the compliance checklist is applicable to all companies including, private companies, non- profit companies, public companies, and personal liability companies. Before submitting their yearly returns, companies must complete the compliance checklist.
To ensure a smooth transition into a new fiscal year and to avoid missing any crucial steps, the following are some essential year-end tax, finance and compliance checklist.
- Reconciling All Balance Sheet Accounts
You must go through all your business credit and bank accounts and do reconciliation for all the payments and charges made. You must ensure that the statements match with your business records and any discrepancies that occur must be investigated.
- Documenting Accounting Transactions
Another crucial step is to document all the accounting system entries and make year-end changes to account for revenue and expenditure in terms of accruals and deferrals.
- Reviewing Income Statements Accounts
It is also important to review expense accounts to establish whether there are misclassifications to prepaid expenses, fixed assets or other accounts in the balance sheet. In addition, looking for expenses that might have been charged to the wrong expense account is important because it helps in reclassifying the expenses where necessary.
- Creating an Annual Budget
By evaluating the interim financial statements of the current year, you can start to plan an annual budget. This will give you an understanding of the current year expenditures, which drive the budget and financial forecast for the coming year.
- Payroll and Vendor Tax Forms
Any non-standard income on employees like taxable reimbursements on education, life insurance or other forms of taxable income that is not processed through the payroll cycle must be included. It is mandatory to submit tax returns to SARs on the given date.
Entrepreneurs whose income is generated from sources than wages such as investments, or trade are needed to give in two provisional tax returns. Additionally, they must ensure payments of two provisional tax are made where applicable in the course of the tax year.
- Becoming Audit Ready
You must make sure that your financials are generally accepted accounting principles (GAAP) compliant. This is because when it comes to selling a business or seeking funding, investors require financials that are accurate. As such, working to be compliant means you are audit ready.
7. Reviewing Internal Controls
You should also review your internal controls and processes to ensure they work effectively. Correct the loopholes that may allow high errors or fraud in the process.
Outsourced Finance have qualified accountant that can assist you with your year-end compliance process