Help with using xero to help predict tax liabiltes for the current tax year

[jon9000]

Sorry if that sounds a bit long winded but was going to try and have a rough idea of my profitability before the year end... I'm guessing I use the profit and loss but could do with some help! Tia

 

[Bignor Farmer]

Unfortunately, unless your Xero is really well set up, it’s a bit more complicated than that. You’ll need to make sure all private proportions are allocated to drawings, assets are properly setup and showing depreciation, then you’ve probably got some capital allowances to take into consideration for income tax if you’ve bought some machinery.

 

[upnortheast]

Trouble is the p&L figure in xero or whatever is different to the tax liability calculation.
Someone will be able to explain it better than me

 

[yellow belly]

If it is giving a accurate profit figure
take profit add back depreciation then deduct the machinery purchases and that will be about the taxable profit

before the end of the year you need to look to see if there are and prepayments and accrued costs
one example is bps and stewardship payments they need to be put in the year they are received for
example is a end November tax year the bps paid on dec 1 is in the previous years trading

rent paid in advance or in arrears is another issue

if your accountant has adjusted the previous year untill they finalise this years adjustments the profit figure will be inaccurate

the other big variable is stock of grain in store and crops in the ground which is associated with the valuation and crop sales timeing

 

[redsloe]

Sorry if that sounds a bit long winded but was going to try and have a rough idea of my profitability before the year end... I'm guessing I use the profit and loss but could do with some help! Tia

If your trading style is similar year in, year out then p/l wont be miles out. Our first year with xero last year and if we took the profit from zero, subtracted capital expenditure, the figure left was around our final profit that the accountant made.
I don't know if that was just coincidence or not but will use similar format for this year!

 

[teslacoils]

I told my accountant that all my figures were in QuickBooks, so he'd better have a rough idea on my tax by end of this month so I can get the sheds repaired or not.

 

[farmerdan7618]

P & L is the point to start with, first question is how clean is the data?

Needs to be accurately analysed with a split between repairs and new equipment or building work.

Should not contain capital repayments on loans or HP's.

Does not need depreciation calculations.

Once you have this, take off allowances for machinery purchased and add back proceeds of machinery sold.

Will get you close on a taxable profit for the business, the critical thing is what do you do about it once you have that information?

This is where I would suggest speaking to your accountant about your options, pre year end planning is the best money you can spend on accountancy and shouldn't be expensive as less pre meeting work to do.

If anyone is struggling with this, PM me in confidence.