Accounting areas to take care of before the financial year
Accounting areas to take care of before the financial year
As the end of the fiscal year approaches, you must keep track of specific critical responsibilities. If you operate a business, the importance of these responsibilities rises dramatically. Calculating your advance taxes and saving to avoid paying certain taxes will put you in a good position for the future.
India’s fiscal year runs from April 1 to March 31 each year. As a result, March 31 is a crucial business date to remember in order to ensure that all-important financial obligations are met, important choices are made, and other necessary actions are taken.
Individuals who require a trading system should determine the transactions that have accrued through March 31 and appropriately record the equivalent in the account. Experts who follow the money way of bookkeeping, i.e., the registration of exchanges based on precise revenues and expenditures, as outlined in this article, are similarly critical of the financial year-end date of March 31.
Prepare and analyse financial records
Your small business’s financial statements are its lifeline. They provide you with an overview of your company’s financial situation. Statements also allow you to see historical and present financials, allowing you to forecast your company’s financial future and plan for the coming year.
Financial statements can help you better understand your company’s financial situation and (hopefully) make tax season less stressful. Your accounting books provide access to your financial details.
Compile and analyse year-end statements using your accounting records. You should have several financial statements on hand, including:
- Profit and loss statement
- Statement of Cash Flow
- a financial statement
Calculate the amount of tax to be paid in advance.
Income tax is calculated in accordance with the “Pay as You Earn” principle. As a result, Advance Income Duty was due by June 15, September 15, December 15, and March 15 for the whole fiscal year from April 1, 2020, to March 31, 2021. If an assessee does not pay 90 percent of his creation fee expense by March 31, 2021, at the very latest, interest will begin to accrue from April 1, 2021, until the payment date.
The assessee should next calculate the assessable pay as accurately as possible under the circumstances, measure the cost requirement, and remove the TDS to apply the entire advance taxable income and pay the equivalent by March 31. Before March 31, the advance tax must be credited to the central government bank account and the challan sequential number must be received.
Profit and loss statement
Your revenue and expenses are summarised in your income statement, often known as a profit and loss (P&L) statement. Your income statement shows how much money you made and lost over the course of the year. Here are some examples of what you might see on your profit and loss statement:
- Expenses for taxes
- Expenses of operations
- The selling price of products
Other monetary costs and benefits
By examining the difference between money gained and lost on your statement, you can determine your company’s bottom line. Examine the differences in revenue and expenses from year to year by comparing this year’s income statement to last year’s.
Make tax-saving investments
To save money on taxes, investments must be made in a certain way. For example, an individual and HUFs (Hindu Undivided Family) are eligible for a tax deduction u/s 80C of the Income Tax Act for deductions up to Rs. 1,50,000/- in measure of enterprises. Additional deductions for health insurance premium payback u/s 80D, donations u/s 35AC or 80G are only allowed if the contribution or payment is made on or before March 31.
Keep track of physical inventory
Take a physical stock of raw materials, construction work, refined goods, supplies and equipment, mobile equipment, consumables, and other items on March 31. Collect data on its substantially estimated value as of March 31 and include it in the company’s financial statement.
Make a claim for a bonus reduction.
Additional depreciation for assets can be claimed for the industrialised unit. After March 31, 2018, an extra 20% of real plant and equipment expenses will be depreciated, subject to specific terms and limitations, for new plant and hardware purchased and built by a member of the assessee engaged in assembling or creating. If such plants and hardware are purchased for fewer than 180 days, a 10% devaluation will be authorised under numerous different terms and conditions.
By purchasing and using plants and hardware by March 31, 2019, at the latest, an industrialised unit will benefit from this further devaluation deduction. Some evaluations are eligible for a 15% reduction in incentives for securing new plant and system by March 31, 2019.
It is consistently unbelievable to keep these tasks simple during year-end financial proceedings. Special accounting software will enable you to plan for the coming fiscal year in order to keep a strategic distance from the stress of the last minute.
It is reasonable to believe that if you do not meet your tax obligations within the given time frame, you will face substantial consequences. The measurement and settlement of taxes, such as GST filing and luxury tax, is required for the management of all corporate organisations.
Purchase of business-related fixed assets
Purchase cash depreciation capital (half of the determined rate of depreciation). Assume you purchased a major or fixed asset for your firm in a previous year and used it for 180 days or more for your business or activity. In that instance, depreciation will be allowed at the rate indicated for that type of asset.
When a resource is used for company or occupational purposes for less than 180 days in the previous year, depreciation is limited to 50% of the amount measured at the required percentage.
As a result, if you want to buy a fixed asset with the ultimate goal of using it in the organisation, buy it and put it to use for business purposes before March 31 to take advantage of depreciation at half the normal rate.
Therefore, if you have questions about how to make a financial statement, ITR, it might be helpful to work with a business attorney or online legal service for advice and guidance. We, at IndiaFilings, offer this service at an affordable price with tremendous support. So, get in touch with us and we will be glad to assist you.