Business Profits Review 2024-25

The check list that follows this introduction is relevant for any business structure: sole trader, partnership, or limited company. Where there are ideas listed that are only applicable to one of these three, this will be highlighted in the text.

The aim of this area of business year-end planning is to consider factors that you have some measure of control, and that will enable you to either reduce or increase your published profits for the year under review.

This may seem to be counter intuitive. How can you affect levels of profitability? Isn’t this determined by market conditions?

We shall see…

However adept you are at keeping your accounts it is likely there are inaccuracies in your numbers that will have an impact on the amount of profit or loss you believe you have achieved. We are not suggesting that you artificially adjust your figures, far from it. The prime aim of pre-year-end planning is to seek out your true financial position and then consider what can be done to improve your position BEFORE the end of your trading period. If you wait until after your year-end, remedial action may no longer be possible.

The benefits of profit planning prior to your trading year-end can be summarized as follows:

  1. An opportunity to arrive at a realistic estimate of profits for the current
    fiscal year.
  2. A chance to make decisions based on
    this estimate that will benefit your longer-term goals.
  3. Time to consider the effects of the current year’s performance on your business investors, your bank, and your staff.
  4. It also flags up the ability of your business
    to sustain your current and future remuneration and withdrawals from
    your business.
  5. And finally, all UK businesses will be challenged by the current, dire state of the UK and world economies. In the UK we are facing high inflation, rising interest rates, continuing supply issues – as well as extreme increases in energy costs. Assessing and planning your business profitability will be key to surviving these challenges.

Another word for planning is forethought. If you do not plan your business future, you are apt to end up considering the reasons why things have not worked out as you expected – you will stare at the open stable door, and the empty stall, and wonder why you never repaired the lock.