Business Profit Review Checklist

ACCOUNTS:

  • Make sure you have depreciated your fixed assets, equipment and vehicles, at a realistic rate. You don’t want the written down value of your assets to exceed their market value.
  • Write off any bad debts.
  • Write off any slow moving or obsolete stock. Consider an on-site auction or similar to sale.
  • Make sure that you have not capitalised any replacement equipment that should have been written as repairs or written off equipment purchases that should have been capitalised.

Take a good look at your cut-off procedures. Are all your supplier invoices received and posted? Have you invoiced

customers for work you have not delivered yet?

PROJECTIONS TO THE END OF YOUR
TRADING YEAR:

  • Base your sales projections on known factors. For example, orders received, consistent with past or repeat sales and considering current economic challenges.
  • Base your cost projections on current fixed costs, rents, wages and salary costs, and additional costs that you feel need to be included. Be realistic.
  • Factor in expenditure on capital equipment that you feel must be acquired to maintain sales or production at the required levels.
  • Make sure that apart from creating profit and loss and balance sheet forecasts, you also prepare a detailed cash flow forecast.

CONSIDER THE RESULTS.

Do the results:

  • Show an overall improvement or worsening of your financial position.
  • Reveal a healthy cash flow.
  • Point to deteriorating market conditions, falling demand for your products or services. How will this affect your planning for the immediate future and your longer-term goals?
  • If you consider demand for your services will rise, are you in danger of over-trading?
  • How will your business investors, or your bankers, react to the projected results?
  • Is your business providing you with an adequate return for your capital invested in the business and are you properly remunerated for the time you spend in
    the business?

ACTION PLAN:

Based on the answers to these bullet points you will need to draw up an action plan. Included in this plan will be scrutiny of your business tax position – consideration of these tax issues are listed separately in the following section.