It’s that time again. Farm businesses across the UK are going through their year-end process – a necessary but often daunting task. However, this does also offer the chance to take stock internally, determining how your business is performing and what you can achieve this year.
Anne Cianchi, Product Manager at Farmplan, the UK’s leading agricultural software specialists, has shared some general advice and tips to help you get the most out of your year-end process and set a strong base for the next twelve months.
From 1st April 2022, the rules are changing due to the Making Tax Digital (MTD) initiative. All VAT-registered businesses – including those below the current £85,000 turnover threshold who were previously exempt – will now need to make the switch to MTD or risk incurring penalties.
“These changes mean that you need to manage your VAT digitally using approved software,” says Anne. “If you’re still cut and pasting with spreadsheets or recording transactions in ledgers, this won’t be enough. Approved software, such as Farmplan’s Business Cloud and Business Manager, is required by HMRC.
“This can be intimidating for those yet to make the switch. However, we’ve seen that businesses often underestimate just how smooth the switchover will be – and how many other benefits to efficiency and insight into your business will result.”
Be early and organised
Anne advises against waiting until your tax return is due. Acting early and making sure everything is in order is key.
“Make sure that all your records are complete, and all invoices are entered,” says Anne. “Chase anything up that needs to come in and check that the balance in your software matches that in your bank account, so you can reconcile any differences.”
Information is most useful the more current it is. If you wait, its value is greatly diminished. Acting straight after the year end helps you to know what went well in the last year and immediately make any changes that could benefit your business.
Review your figures and processes
According to Anne, many errors picked up by accountants are relatively minor and can often be identified with a quick check before sending.
“Do your figures look reasonable?” says Anne. “Give them a scan and see if anything stands out as not looking quite right. Most of us have an idea of our major sales and purchases. Drill down into any figures that seem strange.”
“It’s also worth reviewing processes at the same time. Is the system you’re using, giving you everything you need or do you only have a broad overview of your business performance? For example, it might be worth setting up enterprises to see how different aspects of your farm are performing individually, instead of just as a whole.”
“The year-end process is the perfect time to take stock of all the information available to you. Although the admin and time required can feel stressful, view it as an opportunity to gain value from a full year’s worth of data and make progress going forward.”