Sneak Peak - Here come the numbers

Here are a number of very good reasons:

Without accurate information to base your systems on, it would be impossible to make accurate forecasts, budgets or cost decisions.  Loss of control usually means loss of business.

Tax is paid by all businesses and is based upon business performance.  Without good accurate records the tax authorities would not be satisfied and could make a ‘non-assessment', which is invariably much higher.

If a business is registered for value added tax it will need accurate records to satisfy Customs and Excise requirements.

Limited liability companies are required by law (Companies Act) to keep accurate and detailed records of transactions and supporting documentation.  They must submit annual accounts and reports.

Any prospective lender will want to see records of the last two or three years of business before making a decision.

A business will need to keep records of NI contributions, statutory sick payments and/or income tax deductions or repayments.

If at any time the owner wanted to sell the business the potential buyer would want to see records of performance before buying, usually two to three years of trading accounts.

Each partner will want to see how well the business is doing and the value of their stake in it.

Legal reasons are enough

These are all good reasons for having an accurate system and although the legal requirement is reason enough, the need for information to control and develop the business is an overriding one.

These records will come from a good bookkeeping system relying on sound documentation.  A Profit and Loss Account, a Cash Flow Forecast and a Balance Sheet will arise from them.

Accounting and trading periods

Your business activity will be continuous, but one decision you will have to make is the date for the start and finish of your business year.  Many businesses used to choose a period finishing at the end of April but since tax is now paid nine months after your first assessment, plus 50% of the projected tax for the future year - choose your tax year carefully. 

Exercise - What is your accounting period?

Check your accounting period. 

My accounting period is from ......................   To .........................

Because:

Is it stifling your business or helping it along?

To find out more about the current books we offer contact one of the team on 01279 311492 or send us an email on info@academyoflearning.co.uk