As a business operator either as sole trader or limited company, you will probable require financial services which are best delivered by a firm of accountants. The services of independent accountants will differ in many aspects from what you’d expect from an accountant on your payroll. In this article, we’ll explore a few of the services for which you might retain an accountancy firm.
Book keeping services: This refers to the recording of your day to day trading transactions. Thus all your purchase invoices, receipts for expenses paid, sales invoices, credit notes received and issued, delivery charges and delivery notes, cash received from debtors and cash sales are entered into your accounting records, often referred to as your “books”. In this day and age, your “books” would usually be a software package, and the records would be entered using the fundamental double entry system and other accounting precepts.
A lot of small businesses and most medium to large businesses have employees who handle the book keeping internally, however, for the sole trader or small business , it can be convenient to have this function fulfilled by their accountants. This does have the effect of freeing up time for the business to focus on its core activities. Plus, it should result in excellent record keeping as the accountancy records are being kept by professionals.
Management accounts: These are usually extracted from the accountancy records that have been produced by the book keeping process. management accounts are generally required by the management of a business to provided a financial overview of the performance of the business over a fixed period of time. Monthly, quarterly and annual management accounts are fairly standard. Management would usually receive a Profit and Loss account, and a balance sheet statement together with profitability ratios and perhaps budget deviation reports if a budget had been setup during or before the accounting period being reviewed
Financial accounts: The financial accounts for companies must comply with all the relevant laws, in particular, companies act 2006 . A requirement of the Companies act is that the accounts should follow generally accepted accounting practices (GAAP).The company’s retained accountant would either prepare the GAAP accounts or advise the directors in preparation of the said accounts. Naturally, the nature of the service would depend on the contract for services signed by both parties. Note that whoever prepares the accounts, the responsibility for the accounts lies with the company’s directors. The financial accounts are viewed by the management, the shareholders, the bankers and creditors, potential investors, and other interested 3rd parties. The financial accounts will also be submitted to the relevant tax office and for companies, to companies house. In the United Kingdom , companies house is a government agency involved in the monitoring and control of incorporated businesses in the UK. Accounts submitted to companies house are available for public viewing. The accounts for sole traders and partnerships are not governed by companies act but would be used for tax returns .
Audit: For certain classes of company depending on their size and industry, an audit report is required each year that the company meets the audit criteria plus ancillary years as determined by the secretary of state. Essentially, an audit report requires the reporting accountant to express an opinion on whether the accounts of the company show “a true and fair view” of the affairs of the company . It would be well beyond the scope of this or any other short article to discuss in detail what can be one of the most contentious documents in the business world today.
Corporation tax, Personal tax, VAT: Corporation tax is payable on company taxes each year and handling these matters as an agent on behalf of the business is one of the most important services accountants offer.Personal taxes being taxes collected on the income of individuals can be managed on behalf of companies and individuals by firms of accountants. Value added tax (VAT) is usually managed by a business as part of its on going book keeping procedure. Where the external accountants are also the book keepers, they would generally deal with the management of VAT as an agent of the business.
Company secretarial; The operation of an incorporated business requires that a number of statutory matters are executed each year. These include general meetings , directors meetings , submission of company accounts, submissions of other documents such the annual return, appointments of directors , notification of registered trading address. For smaller businesses , accountants generally handle the company secretarial duties.
There are several other services a firm of accountants can offer, and these include management consultancy, corporate finance, general financial advice amongst others. In business , you will come to a point when you know there is a need for professional business advice, an accountant should be high on your list of persons to call.