18th August 2022
If you run your own business and find yourself guessing how it is doing throughout the year, you may be missing out. We think it is time to ask your accountant for regular eg.: quarterly management accounts.
Management accounts can help you make the most of your opportunities and avoid paying penalties or additional taxes.
Is it possible to run a business without management accounts? Sure, your accountant can look at everything at the end of the accounting period; if you have the time to monitor how your business is doing and you are careful with your finances, you may be ok. Do this if you don’t mind surprises at the end of the year!
However, if you are busy (and also not an accountant), you may want someone to review your business’ finances regularly. This way, you can be alerted of any missed opportunities or possible errors that can have an impact not only on your business but on your personal finances as well.
Let’s look at five areas where management accounts can help:
Have you missed raising any invoices? Have all your invoices been raised correctly? Are you being paid accurately and on time? These are all the questions your accountant will look into; any problems can be addressed without delay at the end of each quarter, saving you time and headache trying to recover a missed or incorrect payment.
Business expenses may be a significant factor in your accounts. Your accountant will look into whether you are missing out on claiming any expenses or if they have the correct VAT rate applied.
3. Taxes and liabilities
What is the estimated tax liability? How much do you need to set aside in your business to meet those liabilities? Is there anything overdue? Management accounts will help you put the necessary steps in place to ensure that the business has enough in the bank at the end of the year. Any missed tax payments will also be highlighted to help you avoid late penalties.
4. Profits and dividends
Management accounts are a snapshot of your business’s financial information at a given time. They will indicate how much profit is available for possible withdrawal. Knowing the accurate figures will help you plan better.
If you are interested in how we can help you maximise your limited company’s potential, please contact us via email@example.com or call 0800 917 9100.