THINGS BUSINESSES MUST DO BEFORE THE END OF FINANCIAL YEAR

The following activities must be strictly followed from January to March every year by every businessman to ensure a relaxed year ahead. I am saying to follow these things and do it before March because after March, you will be stuck in a lot of things for a long time specifically in finalizing your Balance Sheet and finding out your actual gain or burn.

Please note that our financials are finalized after end of financial year i.e. after 31st March. So, indeed a lot of decisions are taken about the business after the evaluation of profits in the business. But, here I am talking about some other decisions that need to be taken to effectively run a business.

So, here are thirteen useful tips from Jhamb and Associates to ensure a healthy, wealthy and flourishing business in the financial year 2025-2026.

These thirteen propositions are finalized after a lot of research and overcoming numerous dilemmas about weeding out some points and inserting in some others.

So, slowly dive into the pool of ideas and enjoy the swim.

1. Reminder to Debtors

• Try to collect all outstanding receivables before the end of the financial year i.e. 31^st March, especially those in arrears.
• So, consider January, February and March as your due dates within which you must collect all the pending payments and ensure complete recovery till 31^st March so that your Financial Statements represent your actual profits/losses and nothing/minimum is standing under the head ‘Amount due from Debtors’.
• When was the last time you reached out to clients/customers who owe you money? Make accounts receivable a priority right now.
• Similarly, note down and update the List of Trade Payables to manage your finances effectively.

2. Remind yourself of Business Benchmarked Incomes and work towards it

• Remember the sales turnover you wanted to achieve at the end of the year!
• Check the turnover earned till December. Make your maximum efforts in January, February and March to ensure that you meet/surpass the expected turnover by the end of 31^st March.
• Leave no stone unturned and put your best before financial the year ends.
• Take the print out of your bank statement and mark the incomes with a green pen, paying particular attention to those incomes you didn’t anticipate.
• For example: you may find through your bank statement, a better market/clients for your products/ services who are ready to pay good price for your products/ services.
• By investing your energy in that direction, you can increase your profitability to a greater extent.
• Pay attention to your incomes to channelize your energy in the right direction before the financial year ends and make your last efforts towards attainment of desired turnover.

3. Remind yourself of Business benchmarked expenses and cut unnecessary costs

• Take the print out of your bank statement and mark your expenses with red pen to look for trends, paying particular attention to those expenses you didn’t anticipate.
• Look out for opportunities to cut unnecessary expenses now.
• For example, you may find that certain subscriptions or services no longer serve your business needs. Unsubscribe them.
• By doing so, you can reduce overhead costs and can improve profitability in upcoming three months i.e. till the end of financial year.
• Pay attention to your expenses trend and try minimizing them now.

4. Plan to save taxes

I know, year-end i.e. 31^st December is not the time to file Income Tax returns but it is surely the time to plan for taking some actions till 31^st March i.e. till the end of Financial Year for saving taxes.

• Start collecting the records needed for this year’s tax return, including receipts for deductible expenses, taxes paid and other relevant documents.
• Schedule a meeting with your tax advisor to go through projected earnings for the year and to discuss any potential tax strategies that might be employed, understand any tax rule changes that may affect your business, investments that should be made and further steps that can be taken to save taxes.
• Make investments to save tax- making investments to save tax involves strategically allocating your money into specific financial instruments or schemes that are eligible for tax deductions or exemptions under the prevailing tax law.
• Don’t let tax deadlines sneak up on you.
• Now is the time to do the planning so that necessary steps can be taken in the upcoming three months i.e. till 31^st March to save taxes.

5. Check your credit Score

• Reviewing your credit report persistently is essential for maintaining a healthy credit score and identifying any potential errors or fraudulent activity.

• Obtain a copy of your credit report and review it carefully.
• Look for inaccuracies or unfamiliar accounts.
• Dispute errors, if any.
• Now is the time to obtain your Credit Report

6. Align Stationary inventory records and replenish supplies

• Verify the inventory required in your business in a year against recorded data and investigate any discrepancies you discover.
• Review office supplies and discontinue storing or ordering unnecessary items.
• Now is the time to review and update your inventory.

7. Purchase of Fixed Assets For Business (from tax point of view)

• Purchase asset to claim depreciation (half of specified rate of depreciation). If any tangible or intangible fixed asset has been purchased for the purpose of business during the previous year and is put to use for the purpose of business or profession for the period of 180 days or more, depreciation will be allowed at the percentage prescribed for that kind of asset.
• If the asset has been put to use for the purpose of business or profession for the period less than 180 days in that previous year, the depreciation shall be restricted to 50% of the amount calculated at the prescribed percentage.
• Hence, if you are planning to purchase any fixed asset for the purpose of use in the business, purchase it and put it to use for business purposes on or before 31st March so as to avail deduction of depreciation at least at the rate of 50% of the normal rate of depreciation.
• If you are planning to sell any fixed asset, try to defer the sale, if possible to 1st April so as to avail deduction of depreciation in the next financial year.

8. Donations

• One must donate atleast 1% of his/her income to charity.
• If you have any money left over at the end of the financial year, this is the perfect time to top up your charitable donations for the year.
• Not only is it the perfect antidote to the shopping and over spending on the New Year season, but it may also merit divine grace on you for fulfilling the needs of the needy. 
• Further, you can claim tax deductions on donations.

9. Account for Capital Gains

• If you have taxable capital gains during the financial year, try to identify your capital assets, especially shares, Mutual funds, debentures etc, which if sold during the financial year, will result into a capital loss. You can sell such assets on or before 31st March and book a capital loss which will help to set off against the taxable capital gain and as a result will reduce or nullify the capital gains tax.
• As a matter of planning the same capital asset can again be purchased on or before 31st March and continued to be held.

10. Account For Unabsorbed Capital Losses

• If you have a carried forward Capital loss prior to 8 assessment years, it will lapse if not set off against the Taxable Capital Gain.
• Hence, if you have a possibility of having taxable Capital Gain for Financial Year, you should not postpone it to the next year, but book the gain on or before 31st March so as to set off the Capital loss against the Capital Gain.

11. Clean-up Your Loan Accounts

• Verify loan accounts and cleanup them up if necessary. If you have given or taken any temporary loans, hand loans and are outstanding, try to repay / recover the same on or before 31st March. This will help in improving the balance sheet position of the ratio of assets and liabilities, Debt Equity Ratio etc. Temporary loans, hand loans can be again given or taken on or after 1st April.
• Since the balance sheet will be prepared as on 31st March, try to square off the assets and liabilities which might show unfavorable position.
• Further, you get tax exemption in case of loan repayment of residential house.

12. Plan for future

• Develop strategic plans for the next year, such as launching new products or services.

13. Physical Cleaning February and Digital Cleaning March

• I, in our office, follow this trend of ‘Physical Cleaning February’ and ‘Digital Cleaning March’. So, I suggest the same to you too.

• Tidy up physical paper and files to keep them well organized.
• When was the last time you punched the papers into the files? Make physical cleaning the files and papers a priority right now.
• Similarly, Tidy up all the documents in proper folders in the computer systems in a customarily followed fashion.
• Ensure that data is saved in the manner that it is easy for you to find the information at the time of need.
• Further, No businessman, in any case, wants to lose data. Losing data is the worst nightmare for a businessman.

• Backing up your computers can be time consuming, but the information stored there is critical.
• Setting aside time at the end of the year can be a good way to ensure that backing up your technology doesn’t get overlooked.
• So, now is the time to store the digital files properly and take back-up.

In the nutshell, Get organized- make sure that you have all of your financial records in order and to bring them in order, ensure that your debts are recovered, your credits are paid, your target sales are achieved, your expenses are minimized, you have aligned inventory records and you have replenished supplies, purchased the required assets and you have taken all steps to reduce or nullify the taxes /capital gains tax.

Last but not the least, before entering the new financial year, do not overshadow the importance of making donations, indulging in Physical and Digital Cleaning and planning the upcoming financial year.

So, I hope you liked and understood the above mentioned detailed tips to elevate your business to the next level in the upcoming Financial Year 2025-26.

SCALE YOUR BUSINESS WITH JHAMB AND ASSOCIATES

Jhamb and Associates is here to help you legally in each and every step of your scaling. Jhamb and Associates will help you with Valuations, Accounting, Licenses, Incorporations, Return filings, compliance management, litigations, liasonings and dispute resolutions.

Jhamb and Associates wishes you a prosperous and successful new financial year. Let’s make 2025-26 our best year yet!

Thanking You

CS Shivani Khurana