How to manage your financial year?

How to manage your financial year?

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Despite having everything back on track after phases of lockdown, many businesses in the UK are finding it hard to get back on the normal tracks. This resulted in lower sales and major cash flows disruption in every other company.

If your business is facing any cash flows disruption because of Coronavirus or any other problem, then you have the opportunity of managing it with the financial year. This will allow you to make an R&D claim at any point without considering your company’s accounting period.

One way to do this job perfectly is to adjusting your financial year so that your business can get the benefit by making the R&D claims. This method can yield a very significant profit in your business regardless of its specifications and industry.

Here’s how you can choose the right strategies to yield excellent results.

How Can You Manage Your Financial Year Cleverly?

One way to build a firm business foundation and to stable the cash flow is to manage your financial year. For that purpose, you must not worry about your current accounting period as many businesses have the opportunity to control its length.

You may either increase the financial year to get immediate R&D Tax claims and fulfill your needs or you may also lengthen it or make it short so your business can easily claim R&D Tax credits and get the benefit of it before your business undergoes any kind of loss.

We will go through each of them separately and discuss each prospect making you decide in a good manner.

1. Shortening your financial year:

Many companies undergo shortening of the financial year in order to get the immediate cash that helps in growing the company income. The reason it is important to shorten the financial years lies in businesses’ eligibility to file R&D Tax claims so they can proceed further.

Let’s say your accounting period ends in December 2021. One way to make your company eligible for the R&D Tax claim is to shorten the financial year to July 2021. By doing this, your business can rightfully claim R&D Tax credits from August 2021 and receives a potential cash credit sooner.

This is actually a reliable resource, especially if your business is not performing well and is in a loss-making stage. This will increase the chance of getting R&D tax credits and improve the overall performance.

But, before you jump to any conclusion, it’s important to know your accounting period so that you can make bigger decisions promptly. So, to avoid any coming hassle, check it beforehand to ensure a smooth process.

2-Extending your financial year:

Sometimes, the shortening of the financial year doesn’t always give you significant results. In fact, it’s statistically proven beneficial tactics that the extension of a financial year does a pretty good job for many businesses across the UK.

Unlike shortening the financial year that can be done many times, the extension of the financial year can only be done once in a five years period. This will allow you to cover up additional expenses of the company for a few more months and helps you maximise the credits and regulate the cash flow easily.

For any business with a financial year longer than 12 months, the cooperation tax returns are applied accordingly. Let’s say your company’s accounting period is ending on June 2021 but you may extend it to August 2021. This will leverage your expenses for additional months and can help you with maximised R&D tax credits.

Nearly every company we come across is facing some kind of cash flow interruptions that may be due to coronavirus shut down or any reason. Making your business more established by applying the latest trends of the market can help in the ultimate growth of your business.

It’s always crucial to get hands-on with the latest innovations and policies that may help your businesses to grow and boost their productivity to higher ends. One way is to think smarter and act accordingly. If your company has been affected a lot in the pandemic and your accounting year is ceasing you from applying for R&D Tax claims, then you need to follow the above guidelines.

R&D Tax Credits are the major sources that can help in re-establishing your business and regulate the cash flow effectively. It is necessary to speak to the R&D tax credit expert as their professional experience can help you decide what will be more effective for your business, either to shorten or lengthen your financial year so you can avoid any colossal problems in the coming times while filing R&D tax claims.

If you need consultation, feel free to contact our R&D Tax Credits experts, they have an effective and competent solution to your every R&D tax problem and query.