4 ways to prepare for a successful tax year

With the mad dash for the end of year accounts now over, it’s time to reset, recalibrate and prepare for another successful tax year. As a strategic advisor to your small business clients, you must be ready to guide them through the next tax year and are in a position to do so.

Preparing your accountancy team for another successful tax year is no easy task, especially in the current ever-changing business environment. Whether you’re helping clients understand recent IR35 tax updates or navigate Brexit, accountants play an important role in small business finance and tax planning.

Join us as we investigate some of the ways accountancy firms can prepare for a successful tax year and help their small business clients thrive. Keep reading to find out more about:

• Upskilling your existing team
• Educating clients on tax year changes
• Optimising operations
• Create a tax year roadmap for your firm

Supporting clients throughout the tax year requires evolving your current services to meet clients’ demands and expectations. The accountancy world is changing to include more advisory services,  innovative technologies and on-demand services. Keeping clients happy in this new world will require a different skill set.

At the beginning of every tax year, take time out of your busy day-to-day operations to review your existing teams’ skills and identify areas needing improvement. You might start by looking at the below areas as studies show that these are the most important skills needed by accountants today:

Does your team know about the latest technologies and how these might help small business clients? Technology literacy is ranked as the number one skill needed by 57% of accountants.

How are existing client relationships? Would your existing clients refer you to other small businesses? Relationship building is ranked as the second most important skill by 46% of accountants.

Is your team prepared to offer strategic advice on areas like tax planning, business operations and more? Small businesses often consider their accountant as their most trusted advisor, so your team must have the right skills to meet this demand. Given the current situation, it’s not surprising that 44% of accountants consider this the third most important skill.

Establishing a training program for your current team is a great way to encourage collaboration and knowledge sharing to proactively address any skills gaps. Personal development plans also improve job satisfaction and overall morale by making team members feel valued.

Every year the government makes changes to personal allowances, tax thresholds and tax legislation. It’s important that you’re aware of any changes and can help clients stay informed. Some of the changes for 2021/2022 include:

As usual, the government has increased the minimum wage amounts and the personal tax and National Insurance allowances. There have also been changes to the National Living Wage and National Minimum Wage.

While the corporation tax rate hasn’t increased, it’s expected to increase in the 2022/23 tax year. The government has also allowed a super-deduction in capital allowance of 130%, which can be used from April 1st 2021, until March 31st 2023.

The UK government has launched many measures to help businesses impacted by COVID-19, including favourable VAT charges. Companies in the hospitality sector can take advantage of a reduced VAT rate of 5% until September 30th 2021. After that date, a new 12.5% rate will apply till the end of March 2022, and the 20% rate will resume after that.

Businesses using the flat rate VAT scheme can also benefit from reductions:

• Catering services can take advantage of 4.5% VAT until September 30th 2021, and then 8.5% till March 31st 2022. 
• Hotel and accommodation businesses using the flat rate get 0% until September 30th 2021, and 5.5% until March 31st 2022.
• Pubs using the flat rate scheme get 1% until September 30th 2021, and 4% till March 31st 2022.

Businesses can also spread out or defer payments on the VAT deferred back in March 2020.

Start the new tax year by reviewing your firm’s internal processes and identifying areas where you could improve efficiencies. What areas could you improve to give your employees more time? Are there any areas where you could embrace digital technologies, such as updating your system to keep up with increasing customer demands? 

Automated accounting can significantly benefit your business by removing manual tasks and streamlining processes. Consider investing in accounting software solutions that’ll improve your team’s day-to-day and make it possible for them to achieve more in less time. Not only will innovative technology improve productivity, but it’ll also allow your team to focus on more meaningful tasks such as nurturing client relationships.

Before you begin the new tax year, take a moment to sit down with your team and review the past tax year. What went well? What didn’t go so well, and where can you make changes?

Examining your overall performance through the crunch period can help you identify areas of improvement and make sure you can set the foundations for a strong tax year. Keep in mind that incremental improvements are a surefire way to create long-term success and stay ahead of the curve. 

You can save your practice time on manual admin and help your sole trader and self-employed clients keep organised records with Countingup’s free accounting software. Our software is MTD-compatible and full of features for you to review and manage client accounts efficiently, with direct access to their real-time organised data. Find out more here.