When do businesses typically start making payments in the annual accounting scheme?

In the annual accounting scheme, businesses typically start making payments by the end of month 4 of their financial year. This timing aligns with the cash flow management and reporting needs of businesses using this scheme. By the end of the fourth month, businesses should have had enough operational data and financial information to make a reasonable assessment of their tax liabilities for the year.

The annual accounting scheme is designed to simplify tax obligations for small businesses, enabling them to make a single payment based on their estimated annual profits rather than making multiple payments throughout the year. This approach can help with cash flow since it allows businesses to gather their financial information over a longer period before making tax payments.

Commencing payments at the beginning of the financial year would not provide businesses the necessary timeframe to evaluate their earnings accurately. Making payments mid-year would also not align with the annual accounting framework, which focuses on yearly assessments. Thus, the end of month 4 serves as an optimal point for most businesses to begin their payment obligations under this scheme.