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Planning for financial year-end

Your guide to a smooth transition through financial year-end 

As the end of the financial year approaches, it’s time to ensure your financial records are in top shape and ready to square away for the year. Financial year-end (FYE) is a critical time for both businesses and individuals and involves summarising and closing financial accounts to prepare for tax obligations, evaluating performance, and planning for the new year. Here’s what’s involved and how to navigate potential pitfalls.


What’s involved in FYE?

Financial statement preparation

This involves creating several key documents that provide a comprehensive overview of a company’s financial health. The balance sheet is a snapshot that displays your company’s assets, liabilities, and equity at a specific point in time. This document helps stakeholders understand what the company owns and owes. Your income statement summarises revenues, expenses, and profits, usually per quarter or year. It’s a vital tool for assessing your company’s profitability. Meanwhile, your cash flow statement tracks the movement of cash in and out of your business, offering insights into liquidity and operational efficiency.

Tax preparation 

Tax is a crucial aspect of financial management. It begins with the collection of essential documents such as receipts, invoices, and financial statements. These documents serve as the foundation for calculating taxes, which are based on liabilities from income and deductions. Filing tax returns accurately and punctually is the final step in this process, ensuring compliance with tax laws and regulations.

Assessment and planning 

These activities play a pivotal role in guiding a company’s financial strategies. Performance reviews involve analysing financial data to gain insights into your company’s operational efficiency and overall performance. Budgeting is the process of setting financial goals and creating budgets for the upcoming fiscal year, aiding in resource allocation and expense management. Strategic planning entails identifying opportunities and risks based on financial analysis to make informed decisions that align with your objectives and mitigate potential threats. These practices collectively contribute to the effective management and growth of your company’s financial health.


When is FYE?

A company’s financial or fiscal year-end does not necessarily correspond with the calendar year or the government’s tax year (1 March to 28 February). This means that you can choose an annual year-end closing date that works for your industry, as long as it remains consistent. Many companies in South Africa tend to align their company’s financial year-end with the SARS personal tax year dates, meaning their financial year-end is on the last day of February.


Potential financial year-end hurdles


  • Disorganised records

Issue: Incomplete or missing documentation leading to inaccuracies.

Solution: Implement a systematic record-keeping process throughout the year.

  • Tax compliance issues

Issue: Incorrect tax calculations or missed deadlines.

Solution: Regularly update tax knowledge or consult a tax professional for guidance.

  • Technology glitches

Issue: Software errors or data loss can disrupt financial calculations.

Solution: Back up data regularly and keep software updated to prevent issues.

  • Cash flow challenges

Issue: Inadequate cash reserves causing liquidity problems.

Solution: Review cash flow projections and explore financing options if needed.

  • Inaccurate reporting

Issue: Errors in financial statements impacting decision-making.

Solution: Conduct thorough reviews and consider employing an external auditor.

  • Regulatory changes

Issue: Failure to comply with new regulations affecting financial operations.

Solution: Stay updated on regulatory changes and adapt processes accordingly.

  • Failure to plan ahead

Issue: Lack of strategic planning leading to an uncertain financial future.

Solution: Develop a comprehensive financial plan to guide future actions.


For companies with February year-ends, the following annual deadlines apply:

  • Second provisional tax returns are to be submitted by the end of February each year
  • Annual financial statements to be prepared by the end of August each year
  • If still outstanding, the previous year’s income tax returns must be submitted by 28 February.

Some other dates and ongoing submissions to keep in mind (not necessarily applicable to all companies):

  • PAYE: 7th of each month.
  • VAT: Due no later than the end of the month
  • Companies tax (CIT): One year after your company’s year ends, for example, February year-end 2023 will be submitted in February 2024.
  • Provisional tax: 1st provisional tax: 6 months after year-end. 2nd provisional tax: 12 months after year-end. 3rd provisional top-up payment: 18 months after year-end.
  • EMP501: First interim submission: October. Full annual submission: May.
  • Dividend tax: The tax withheld to SARS on or before the last day of the month following the month in which the dividend was paid.
  • Compensation Fund ROEs: The deadline for submitting the ROE is officially 31 March each year, but generally extended to 31 May.


Benefits of staying on top of FYE admin

Accurately closing your books at the end of the financial year is a legal requirement. That said, there are many other advantages to being thorough with the process and sticking to the various deadlines, rather than simply ticking compliance boxes.

Preparing for your FYE needs attention to detail, organisation, and foresight. Addressing these potential problems proactively will make the process smoother and ensure your financial reporting is accurate so that you’re able to make informed decisions in the year ahead. Remember, getting professional advice is invaluable for navigating complex financial matters

Do you need help with your financial year-end?

Contact Counteractive today.

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