Whether you're self-employed, part of a business partnership or run a limited company, each year you will produce year-end accounts, which calculate how much income tax you owe, or how much corporation tax the company owes.
For many business owners, year-end accounts are the only accounts that give them any indication of how well their business is doing. However, the problem with 'year-end' accounts is just that, i.e. they are produced after the business year-end has finished. They do not provide business owners with an up to date analysis of the business throughout the year.
Step forward – management accounts.
What are management accounts?
Think of management accounts as your business's monthly financial health check. Unlike your year-end accounts, which are created to keep HMRC and Companies House happy, management accounts are for you.
They give you a clear picture of what's happening in your business, right now, not 12 months ago. You can see where the money's going, what's working (and what's not), and whether you're on track to hit your goals.
Typically, management accounts include:
• A profit and loss report
• Balance sheet
• Cash flow overview
• Key performance indicators (KPIs)
And because they're tailored to your business, they can be as simple or as detailed as you need.
How are management accounts produced?
Management accounts are usually prepared monthly or quarterly using up to date bookkeeping records. That's why having tidy books is so important; if your records are a mess, your figures won't be reliable.
I'm a small business in Rochdale – are management accounts really for me?
Yes! In fact, management accounts are especially useful for micro and small businesses as they can help with:
• Better cash flow management: You'll spot potential issues early and avoid nasty surprises.
• Making smarter decisions: Whether you're thinking about hiring, investing in new kit, or launching a new product, you'll have the facts to back up your choices;
• Giving peace of mind: You'll know exactly where you stand financially – no more guessing; and
• Creating a faster year-end: If your accounts are in good shape all year, your year-end process will be quicker and easier for your accountant, which could save you money.
Are management accounts costly to produce?
Not at all. We work with small businesses every day, so we know how important it is to get real value from your investment. Our management accounts service is flexible and scaled to suit your needs. In some cases, management accounts can save you money, as the information they provide can identify future tax bill amounts much earlier in the year, allowing you to take action to reduce your tax liabilities.
How can DWilkinson&Co help my business?
If you're interested in seeing how management accounts could help your business, let's have a chat. We'll explain how it works, what's involved, and the kind of insights you can expect.
We can tidy up your records (if needed), prepare the reports, and explain what the numbers actually mean. If something doesn't look quite right, we'll flag it. If we spot an opportunity to save money or improve performance, we'll let you know.
Get in touch, and let's see how we can help your business together.
