What businesses can do to streamline their tax and auditing process
To be a successful business, you must have a good grasp of your taxes.
From VAT to Corporation Tax, there are a few to remember. Streamlining your tax and auditing process will help to keep you compliant in the eyes of the law and minimise the amount of time you have to spend on it.
Many of the tax systems are changing and digital recordkeeping is becoming part of being compliant. Using accounting software does make taxes and recordkeeping easier, as it is all stored online and in one place. Long gone are the days when filing cabinets needed their rooms for business records.
Using accounting software can also help to reduce errors as any calculations will be done by the software, although you will need to be careful when entering the data manually.
Regular financial health checks
Although there is no definitive way to define financial health, there are several factors you can regularly look at. You may find it easier to incorporate this as part of your quarterly or yearly review, as you will have all the information to hand already.
Liquidity is a major factor to consider for financial health. The more money or assets you can cash in easily, the better your liquidity. Essentially, your business will be able to meet its debt obligations.
Collaboration with tax professionals
When it comes to financial and legal compliance, it is always beneficial to utilise accounting services. Having a team of professionals scrutinise your records will help to prevent you from making a step wrong.
The right accounting team will work with you to make sure you file any returns on time, make the correct payments, and pay your staff’s taxes appropriately. This will prevent you from being slapped with any late filing penalties or non-compliance fines.
The fines for non-compliance can be large. For Corporation Tax, you can be fined £100 if it is a day late, increasing to £300. HMRC will estimate your bill and add a 10% fine if you are late by 6 months. For repeat offenders, the initial fines will start at £500.
Employee training and awareness
Taxes and auditing are a team effort, so your whole company must be aware of any requirements or processes you have. When hiring new staff, make it part of their induction training so that they are set up for success from day one.
With existing staff, you may want to offer periodic compliance training as a refresher. You should always implement these sessions if you change a process or your legal responsibility changes as well.
By ensuring everyone is on the same page you will reduce the chance of inadvertent errors occurring, and therefore non-compliance.