The end of the year brings with it one of the most important tasks of any company, be it large, small or self-employed. The closing of the fiscal year is the moment in which we have to leave everything well tied with the Treasury, but it is also a good occasion to make an accounting balance of how the year has gone.

To be able to make a fiscal closing of the year, the first thing to do is the accounting closing. It is necessary to know what income and expenses we have had and check that we are up to date in payments and collections with our clients and suppliers. If you see that this is not the case, you have to start claiming those invoices that have left us owed and get up to date with what we owe to our suppliers.

Once we have this part done, it is important to see if we need to make an expense at the end of the year to be able to deduct VAT and thus compensate what we must pay, or if it is convenient to wait to bill some income next year, as long as this is possible.

The importance of the fiscal closing of the year is that it is what determines the taxes that you will have to pay. Keep in mind that this is the time when you must regularize the entire business, bring it up to date and set the foundations for what the following year will be like. In addition, the annual balance also gives an indication of whether the company continues to pay taxes as before or changes to a large company, in the case of those that have grown a lot in turnover.

 

Steps to take to make a good fiscal closing of the year

 

1 Review all invoices. Every quarter a statement is made and we review, we should, the invoices that we issue and those that we receive. But this is the moment to see that everything is correct and that we have declared all the ones that we have done. We can do this step in the review of collections and income that we have commented on in the accounting balance. It is a way of seeing that we have nothing pending to declare.

2 Check that everything is in order with the Treasury. The notifications that the Tax Agency sends us do not always reach us correctly or we may not see them, it is important to enter the mailbox where they are all registered to see that we have nothing pending. If there is, this is a good time to catch up. Failure to reply to the notifications of the Tax Agency can have serious consequences.

3 VAT, withholdings and social security.  It is necessary to check that we have been making the VAT returns and withholdings correctly, and that we have been paying whenever it has been necessary. If we see that VAT is returned to us in the annual return, we will have to decide if we want it to be returned to us or better compensate it in the following year or years. It is also important to see if we are up to date with all social security contributions, ours and if we have their employees as well.

4 Make a list of operations that can be viewed with a magnifying glass. That is, look at everything you have done during the year that may be a reason for review:

  • Collection of aid for COVID-19. That everything is well declared.
    • Moratoriums on mortgages.
    • Postponements in taxes and social security contributions.
    • Payment of the aid of the Self-Employed Mutual.
    • ICO financing.
    • State and regional aid.
  • Unusual deductions.
  • Unexcused loss of income.
  • Ertes that have been produced in the company.

5 Check that our headings do not change. When we start the business activity, we must register in a heading in the Economic Activities Tax. This may vary, because we change or expand our business and that must be reflected in the fiscal closing or take it into account for the following year. Remember that these changes must also be communicated to the Tax Agency.

If you need more information, you just have to talk to us. In Capellas i Associates we are here to help you in everything you need.