What is an Accountant?

ac·coun·tant  (-kountnt)  n.

 

One that keeps, audits, and inspects the financial records of individuals or business concerns and prepares financial and tax reports. 

Collins English Dictionary – Complete and Unabridged 6th Edition 2003. © William Collins Sons & Co. Ltd 1979. 

Accounts

Accounts should not be viewed as a just a statutory requirement and a chore to be got through. Professionally prepared accounts are vital for a successful business. Whether you are a sole trader, a partnership or a limited company you need to have good accounts.

At any time in your business the accounts that you produce are a tool for your trade; whether that be for use in budgeting, forecasting or general business planning or for securing investment and growth from financial institutions and or investors.

The quality and accuracy of your accounts can also assist your suppliers when granting credit facilities - this can be very important to your business for longevity and growth.

Management Accounts

It is not a statutory requirement to have management accounts but they give you a true picture of how your business is performing month by month.

They can bring to light problems that may have been half-hidden and they can give an indication of changes that need to be made to avoid problems getting bigger and areas that need attention that were not anticipated.

There are other good reasons for keeping accounts up to date. They will give you an early idea of your tax liability, which is so much better than the figure being sprung on you at the 11th hour, and the figures will be readily available if needed to borrow money or convince an investor.

It could prove very costly to wait until the end of your financial year to find there has been a problem that could have been tackled earlier.

Your management accounts can be monthly or quarterly. We can set up a system that suits you and your company’s needs or we can show your staff how to do it. They can be as simple or as detailed as you require.

Get in touch here if you would like to see samples.

 


Our Accountancy Services...

Accountancy service is more about using the best of our skills and abilities as a practice to obtain the very best tax position for both our clients and their businesses. At all times we ensue that our team is always up to date with the best rules and information HMRC has to offer..

Accountancy, as we know it, began in the 19th Century although it's been around in one form or another since the beginning of man.. being able to account for ones financial position...

SW&A Accountants will use the most up-to-date rules and regulations and if needs be our many many years of combined experience means we can delve into the archaic practices if its in our clients best interests.

Some Accountancy Terms and Meanings...

Aged Creditors Report - Funds payable from the business and the length of time they have been owed. Paying suppliers in line with their terms should ensure they are keen to deal with you again.

Aged Debtors Report - Funds due to the business and how long they have been due. Use as part of your credit control procedures, make sure you chase up debts before they become too old.

Assets - Something the business owns that should lead to funds flowing in. Opposite of liabilities.

Balance Sheet - A snapshot at a specific point in time of all the assets and liabilities of a business.

Bookkeeping - Maintaining a detailed record of the receipts and expenses of your business. Most bookkeeping packages will also keep track of your assets and liabilities.

Capital Allowances - The tax equivalent of depreciation. HMRC don't trust accountants to use a suitable depreciation policy, therefore they created their own.

Cash Flow - How money has flowed in to/out of the business. A sale hits the profit and loss as soon as it is made, but doesn't appear in your cash flow until you have been paid.

Debtors - People who owe the business money. You should chase these up on a regular basis to ensure they are converted into cash.

Depreciation - An accounting concept to write off the value of an asset over time. For example a new van may cost £15,000. After a year it may only be worth £10,000. Depreciation represents this fall.

Equity - The bottom half of a balance sheet. Equity is the funds attributable to the shareholders and typically includes the share capital plus retained profits. This should equate to your net assets.

Fixed Asset - Asset acquired to be used rather than resold. Usually held for over 1 year. Examples include computer equipment, a lease on a property, or a van.

Goodwill - An intangible asset that represents the value of a business over and above its identifiable assets. Businesses are typically sold for more than the book value of their net assets.

IFRS - International Financial Reporting Standards. The international equivalent of UK GAAP.

Liabilities - A debt the business owes that should lead to funds flowing out of the business. Opposite of assets.

Net Assets - The net value if you sum up all the assets and deduct the value of all the liabilities. If you end up with a negative figure, you have net liabilities and the business is insolvent.

Overheads - Costs which don't directly relate to sales. These are typically also fixed costs, so things like rent & rates, accountancy fees, depreciation.

Profit & Loss Account - A summary of all your income and expenditure over a given period.

Retained Profit - The sum of all profits (after tax) to date, less dividends paid out.

Self Assessment Tax Return - Or personal tax return. You need to fill in one of these if you are self employed, have other complex income (eg buy to let properties), or HMRC simply request you to do so.

Tax Avoidance - Reducing your tax burden in ways that fully comply with the law (legal). This ranges from ensuring you claim allowances to complex offshore schemes which HMRC constantly try to stop.

Variable Cost - A cost which changes with your level of output. Examples include raw material costs or costs of subcontractors paid by the hour.