The end of the financial year is approaching while reminding us of all the important fillings we need to wind up. From bank statements to managing physical inventory to claiming additional depreciation, there are various things an entrepreneur must do before the financial year ends. It is also integral for investors to collate the income earned from different sources of investment such as capital gains or dividends so that they could calculate the tax liability.
If you are confused as to what important things you will need to complete before the financial year ends, we are here for you. We have curated 6 things you should do before the financial year ends. So let’s dive in.
Checklist of 6 important things to do before the Financial Year ends
1. Try to verify your Loan accounts
Loans and debts are common in the world of business. To scale your business, it’s important to expand capital that can only be generated by loans. But you need to check and verify the loan accounts before the financial year ends. If you have taken any loan, try to pay it on or before 31st March 2021. This will help you improve the balance sheet position of the Debt Equity Ratio.
|Quick Tip: While adjusting your bank statements if you discover any errors, you can compare it to cash a/c in the general ledger of the bank statement to spot the errors.|
2. File the TDS Returns
Business entities are required to file TDS returns timely to avoid late filing charges along with interest on late payments.
3. Calculate the GST turnover while reconciling GST ledgers
If your business is not under the GST registration limit of ₹40 lakh, you should keep the track of your turnover. The total turnover up to 31st March should be calculated for the purpose of determining the important aspects such as the GST registration, eligibility of opting composition scheme, and applicability of filing of specific returns.
Moreover, GST payments are done either via tax credit or challan payments. You should reconcile the Cash Ledger, Credit Ledger, and Liability Ledger on the GSTN portal along with your books of accounts. Make sure all the entries in the books are done before the year-end. Also, don’t forget to reconcile debit notes, credit notes, rate difference, discount, etc.
4. Conduct a physical inspection of inventory
Take a physical inventory of Raw Materials, Work In Progress, Finished Good, Stores & Spares, Loose Tools, Consumables, etc. as on 31st March 2021. Also, compile the information of its market value as on 31st March 2021 which would be essential at the time of valuation to be adopted in the Balance Sheet as on 31st March 2021.
5. Purchase Of Fixed Assets to claim depreciation
If you have purchased any tangible or intangible fixed asset during the previous financial year and made it put to use for the period of 180 days or more, depreciation will be allowed at the percentage prescribed for that kind of asset.
If you have purchased an asset for a period of fewer than 180 days, the depreciation will be restricted to 50% of the amount calculated at the prescribed percentage.
So, if you are planning to purchase any fixed asset, purchase it and put it to use for business purposes on or before 31st March 2021 so as to avail deduction of depreciation at least at the rate of 50% of the normal rate of depreciation.
6. Calculate Payable Advance Tax
Income tax follows the principle of “Pay As You Earn”. Therefore, during the financial year – 1st April 2020 to 31st March 2021 – for the advance Income tax which was payable on or before 15th June 2020, 15th September 2020, 15th December 2020 & 15th March 2021, if you have not paid at least 90% of his tax payable by way of the advance tax, your interest will start from 1st April 2021 till the month of the payment.
A good accounting system prepares you for the best for the coming financial year. It’s substantial to keep your worksheet updated especially during the Financial year-end to avoid last-minute hassle and stress.