Window dressing, what is that about? That is about dressing up your annual report. This article is about making it more beautiful for the financial expert.
Window dressing is something shops will recognize. It is all about making your product so attractive, a potential client needs to come into your shop. That is the first step to convince this person to make an actual purchase.
The official translation is ‘making it more attractive than it actually is’. That is what this article is about.
Bank loans / lease contracts
The moment the entrepreneur goes to the bank, the bank asks to see the annual reports. The bank looks at the condition of the company, is it active and does it make a profit. The debts a company to third parties and the owner is interesting.
Lease companies are in fact banks with a fancy name. If you would like to lease a company car, you are also asked for the annual report. Why not meet their demand in advance?
If you took a little more from the BV company bank account than your salary, you have a current account debt to the BV company. In the event you made a profit, we suggest to make a dividend payment. ‘Some say’ you should never pay tax when it is not really necessary. ‘Some’ explicitly refer to a dividend payment.
We say that a dividend could solve a current account position, which makes your case stronger to a bank loan or lease contract.
Your bookkeeping recently filed your third quarter Value Added Tax return, if all is well your books were updated to September 30th. Please ask for copy of the September 30th balance and see what you can do.
Werkkostenregeling / work related expenses agreement
The work related expenses agreement is a topic on its own. Bottom line, an employer can reimburse some costs tax free. The percentage is 1,7% with a maximum salary sealing of EUR 400.000. Beyond EUR 400.000 that is 1,18%.
If you employ expected for 2022 a EUR 500.000 salary, then the amount you can reimburse tax free is EUR 7.980.
In your administration you should have account for the costs you reimbursed now already. For instance, you went out for dinner with the crew. That is a cost for this overview. The Christmas present is the next one.
In the situation you already spend EUR 5.000 on the dinner, then EUR 2.980 is left over for the Christmas gifts. Ask your payroll provider what is the balance, as that is part of the payroll administration.
If you then provide chocolate treats in the office around Christmas, you exceeded the maximum as all was already fully consumed. Then the taxation is 80% over the excess. ‘Some say’ this is cheaper than paying the grossed up amount. I say that the ‘Some say’ persons never paid this amount of excess tax. 80% is a lot, even if that is cheaper than grossing up.
May I invite you to have a careful look at your debts on the balance. On some balances a reoccurring debt or obligation is shown. Often the expected accountancy costs for the current year to be paid next year. But if you switched accountants, is that still correct?
There are obligations mentioned on the balance that are old. More old than the payment period. Maybe this is no longer a debt, but accounting wise misunderstood. Have that removed please.
In other words, make sure every debt on the balance is true and correct.
Tax is exciting
We think tax is exciting. Your reply to the above could be: that is exactly why I hired an accountant. True, but does the accountant know? In this time and age everything is done automated. The bank statements are automatically uploaded and booked, same for the turnover. Also in the event the picture is taken of the cost that is automatically uploaded.
On the one hand you are right about the accountant, on the other hand it is you, the entrepreneur who is responsible. It is always good to have a close look at what is actually stated on the annual report. December 31st is a date on which your annual report is fixed. Nothing you can do, we encourage you to check your balance now already.