How to Prepare Your Pharmacy for Financial Year-End: A Practical Checklist
As the financial year comes to a close, it’s crucial to take stock of your pharmacy’s financial health and ensure that everything is in order for the upcoming year. Year-end preparations can seem daunting, but with a clear checklist, you can streamline the process and ensure that your pharmacy enters the new financial year on solid footing.
At Pharmatax, we specialize in helping pharmacy owners navigate year-end processes, so they can focus on running their business effectively. This practical checklist will guide you through the steps to take before the financial year-end, ensuring you’re fully prepared for a smooth transition.
1. Review Your Financial Statements
What to Do:
Balance Sheet: Ensure all your assets, liabilities, and equity are correctly recorded and up to date. Double-check that all outstanding invoices, loans, and other financial obligations are accurately reflected.
Profit and Loss Statement: Review your revenue and expenses to ensure everything aligns with the operational realities of your business. Look for any discrepancies or unusual expenses.
Cash Flow Statement: Ensure that your cash flow statement is accurate, showing how cash is moving in and out of the business.
Why It’s Important:
Your financial statements are the foundation of your year-end process. An accurate review will help you identify any issues, spot trends, and make informed decisions about the year ahead.
2. Assess Your Inventory and Stock
What to Do:
Inventory Count: Perform a detailed physical inventory check, comparing your actual stock levels to your inventory records.
Write-Offs: Identify any expired or unsellable stock and write it off accordingly to avoid carrying excess value in your balance sheet.
Stock Valuation: Ensure that the stock on hand is accurately valued, taking into account the cost of goods sold and market prices.
Why It’s Important:
Inventory management is a key part of pharmacy profitability. By keeping your stock records accurate, you ensure that your financial statements reflect the true value of your assets and avoid any discrepancies in your accounts.
3. Ensure All Invoices Are Settled
What to Do:
Review Accounts Payable: Go through your list of unpaid invoices and ensure all outstanding bills are cleared before the year-end.
Review Accounts Receivable: Chase any overdue payments from customers or third parties and ensure that your receivables are accurate.
Reconcile Your Accounts: Check that all payments, both received and issued, have been correctly recorded in your accounting system.
Why It’s Important:
Unpaid invoices or overdue payments can distort your financial picture and affect cash flow. Settling outstanding accounts ensures that your financial records are accurate and up-to-date.
4. Review Tax Liabilities and Prepare for Filing
What to Do:
Review Your Tax Position: Ensure that all tax payments are up to date. This includes VAT, corporation tax, and any other local taxes. If applicable, check whether you’re eligible for any deductions or credits.
Check Your Expenses: Review the expenses incurred throughout the year to make sure they are properly categorized for tax purposes. Look out for any potential tax-saving opportunities, such as capital allowances or business expense deductions.
Work with an Accountant: Partner with your accountant to calculate your tax liability and ensure you're fully compliant with HMRC regulations.
Why It’s Important:
Proper tax planning and preparation can save you from penalties or late fees and help you minimize your tax burden. Being proactive about tax planning ensures that you avoid surprises when it’s time to file.
5. Reconcile Payroll and Employee Benefits
What to Do:
Review Employee Records: Ensure all payroll records are accurate, including salaries, bonuses, and overtime. Check that any deductions (e.g., pensions or student loans) are properly accounted for.
Prepare for P60s and P11Ds: Make sure all P60s are prepared for employees, and check that all taxable benefits are correctly reported on P11Ds (if applicable).
Ensure Compliance: Double-check that your business is compliant with the latest payroll and employee benefit regulations, including minimum wage and pension contributions.
Why It’s Important:
Accurate payroll records are critical for tax purposes and maintaining employee satisfaction. Proper year-end reporting ensures that all employee benefits and tax withholdings are correct and compliant.
6. Review Contracts and Agreements
What to Do:
Supplier Contracts: Review any contracts with suppliers, ensuring that you’re meeting all obligations and that terms are favorable for the upcoming year.
Leases and Rent Agreements: Check your lease agreements and ensure rent payments are up to date. If your lease is up for renewal, this is a good time to negotiate better terms if possible.
Service Agreements: Assess any service contracts (e.g., cleaning, security) and ensure that services are being rendered as expected, and that you’re not overpaying for unnecessary services.
Why It’s Important:
Ensuring that your contracts and agreements are aligned with your pharmacy’s needs can help reduce costs and avoid disputes. Review terms carefully so you’re prepared for any renegotiations.
7. Set Financial Goals for the New Year
What to Do:
Review Your Business Plan: Revisit your business goals and assess your financial performance over the past year. What worked well? What could be improved?
Create New Financial Goals: Set specific, measurable, and realistic financial goals for the upcoming year, such as increasing revenue, reducing costs, or expanding services.
Develop a Budget: Create a detailed budget for the new financial year based on your goals, forecasting income, expenses, and cash flow.
Why It’s Important:
Establishing clear financial goals ensures that you have a roadmap for the upcoming year. It helps you stay focused, make informed decisions, and measure success throughout the year.
8. Conduct a Financial Health Check
What to Do:
Profitability Review: Assess your profit margins and overall profitability. Are there areas where you can reduce costs or increase revenue?
Cash Flow Review: Evaluate your cash flow management. Do you have enough working capital to cover expenses and investments in the next year?
Debt Management: Review any outstanding loans or debts. Are you on track to pay them off? Can you refinance to get better terms?
Why It’s Important:
A comprehensive financial health check gives you the confidence to enter the new financial year with a clear understanding of your pharmacy’s strengths and areas for improvement.
Final Thoughts: Take Control of Your Pharmacy’s Financial Future
Preparing for the financial year-end doesn’t have to be overwhelming. By following this practical checklist, you can ensure that your pharmacy is in good financial shape and ready to tackle the year ahead with confidence.
At Pharmatax, we specialize in helping pharmacy owners navigate year-end processes and plan for future financial success. If you need assistance with any of the steps above, our expert team is here to help.
Contact Pharmatax Today
📞 Call us at 02476017778
📧 Email us at info@pharmatax.co.uk
🌐 Visit our website at www.pharmatax.co.uk
