How to manage your tax liabilities; you need to speak to your accountant every month

If you're only talking to your accountant once a year, it's time to change that. Regular communication with your accountant on a monthly basis is essential for maintaining your financial well-being and preparing for any potential tax obligations that may come your way.

Let’s dive into some more detail…

At the end of every month, you need to understand what your current tax liability is.

Speaking to your accountant regularly means you can stay on top of this and plan accordingly. This requires you to be diligent about your receipt capture and communicate with your team about the importance of staying on top of your finances.

You need to agree with your accountant on what reporting or management information they’ll provide you with and when.

For example, your accountant can provide you with valuable insights into your finances, such as your VAT position or what you should be saving for your corporation tax liability.

They can also help you make important decisions about things like dividends, ensuring that you don't go above the limit for child benefit and potentially remove money from your family's budget.

By finding out about these things on a monthly basis, you have time to review and make changes if necessary. If you only find out on the filing deadline day, it may be too late to make any changes.

So, what can you do to make sure you're speaking to your accountant regularly and staying on top of your finances? Here are three things to consider:

#1 Establish what reporting you need

To effectively manage your finances, it is crucial to establish what kind of reporting you need.

This includes identifying the type of financial information you need, how often you need it, and what format you prefer it in.

If you're unsure of what you need, it is best to seek guidance from your accountant or financial advisor who can help to determine the most suitable reporting for your business. They'll help you understand the financial statements and reports and explain how to interpret the information provided, allowing you to make informed decisions about your finances.

The reporting you require may vary depending on your industry, size of your business, and your individual financial goals.

For example, if you run a retail business, you may need to track sales data, while a service-based company may require reports on billable hours and client revenue.

If you are managing personal finances, you may need reports on your income, expenses, and investments to help you make informed decisions about your financial future.

So, it's essential to assess your specific needs and work with a professional to ensure you receive accurate and relevant financial reporting.

#2 Set up some saving spaces

Setting up designated savings spaces is a great and easy way to manage your finances and prepare for future expenses, such as taxes.

Many bank accounts offer these features, allowing you to allocate funds for specific purposes, such as tax payments. By setting up a savings space, you can ensure that you have sufficient funds available when tax season rolls around, reducing the stress and financial strain associated with unexpected tax bills.

In addition to tax payments, you may also want to set up savings spaces for other financial goals, such as an emergency fund. These designated accounts can help you save money more effectively, allowing you to track your progress towards your financial objectives and avoid dipping into your regular account.

Setting up designated savings spaces is an excellent way to stay organised, plan for the future, and achieve your financial goals.

By taking the time to assess your financial situation and goals and working with a professional to determine the best savings options, you can make sure you’re well prepared and have peace of mind.

#3 Review the reporting you're currently getting

Regularly reviewing the financial reporting and communication with your accountant is an essential step in managing your finances effectively.

It allows you to assess whether the current approach is working for you and identify areas for improvement. When reviewing your reporting, consider factors such as the frequency and format of the reports, the level of detail provided, and how easy it is to understand the information presented.

If you find that the current reporting and communication is not meeting your needs, it's time to review your strategy and make changes. This may involve requesting more detailed reports, adjusting the frequency of reporting, or exploring alternative reporting methods.

If you’re struggling to understand the information presented or have any questions about your finances, don't hesitate to reach out to your accountant for more support. They’re there to help you navigate the complexities of financial management and can provide valuable insights and advice.

When discussing reporting needs with your accountant, be clear about what you require and what you hope to achieve. They can help you identify the most suitable reporting options based on your goals and can also provide recommendations on how to interpret the information provided.

By working collaboratively with your accountant, you can ensure that you receive the most relevant and helpful reporting possible.

Regular communication with your accountant is vital for effective financial management

Regular monthly communication with your accountant means you stay up to date with your finances, identify any potential issues, and ensure that you are adequately prepared for any tax liabilities that may arise. This allows you to proactively manage your finances, rather than reacting to unexpected financial challenges.

During your monthly check-ins with your accountant, you can review your financial reports and discuss any concerns or questions you may have. This is also an opportunity to assess your progress towards your financial goals and make any necessary adjustments to your financial strategy.

By working collaboratively with your accountant, you can ensure that you’re making informed decisions about your finances and taking advantage of any opportunities that may arise.

Regular communication with your accountant can also help you stay on top of changes in tax laws and regulations, ensuring that you remain compliant and avoid any potential penalties.

As a business owner this is essential as tax liabilities can be complex and subject to frequent changes. Your accountant can provide valuable guidance and advice on how to navigate these changes and stay on top of your tax obligations.

So, if you're no already, make sure to speak to your accountant every month.