“Management Accounts to provide you with peace of mind”.
It may not sound like a great marketing strap line but its what many business owners want.
Not waking up in the middle of the night wondering how much tax they owe or whether they can ‘really’ afford to pay themselves extra.
To know what the financial position of their business is right now and what they should focus on to make improvements and future events they need to be aware of and plan for.
The management reports we prepare for clients come in a variety of shapes, sizes and frequency.
The first step is usually to provide business owners with a free management accounts which provides information based on what’s in their Xero accounting software at a point in time.
Usually we prepare this after the quarterly vat return has been prepared and submitted. This is usually when the bookkeeping is most up to date.
These reports will often highlight areas in their accounts which need attention which is exactly why we provide them.
We want business owners to see how their business is doing at a point in time. They are busy running their business, often won’t have a senior finance person in their company monitoring this type of information.
So, its important that we show them.
Improve the bookkeeping, improve the information
Where clients do their own bookkeeping it’s easy to make mistakes.
Mistakes that we as accountants can usually pick up quickly, after all its what we do every day!
Whether its posting to the wrong account code, not reconciling a bank transaction correctly or maybe duplicate payments or invoices.
Once we show clients how to correct these errors it improves the quality of the information and the numbers become much more meaningful.
Seeing this information usually leads to more questions.
How much tax will I need to pay?
A natural next step for a business owner is wanting to know how much tax they owe based on how their business is doing right now. Not wanting to wait until the end of the year when their annual accounts are prepared.
This is the next step up in the management reports we provide; we add in corporation tax calculations. So, they know how much tax they owe and can start to estimate how much they will owe at the end of the year.
This is also a great time to look at more detailed tax planning, what business decisions can we take to reduce our tax payments in the future.
How much can I pay myself?
Knowing how much profit is left after you’ve allowed for corporation tax allows you to know how much you can pay yourself in dividends.
This is where peace of mind kicks in, knowing how much tax you have to pay, having that put away in a deposit or tax savings bank account.
And knowing that you can afford to pay yourself a little extra each month if you continue making £xxxx profit after tax.
And again, knowing how much personal tax you will need to pay based on how much you’re paying yourself. More peace of mind.
When can I afford to…?
This is when business owners really start to see the value of management accounts. Real information which is enabling them to make better business decisions.
Whether that’s to pay themselves more, take on a new employee, buy that new van or piece of machinery.
And more importantly when they can do that.
Know Your Numbers
When business owners start to look more closely at the financials in their business and ask more questions, wanting to improve their knowledge and make better business choices. We recommend that they start to meet with us on a regular basis.
Usually this is quarterly, for around 60 minutes where we can focus on what’s important in the business right now and start to plan for the future. Decide on what action is needed to move the business forward.
What gets measured gets improved
Measuring the business performance, understanding the financial implications of business decisions, seeing the result of those decisions in the management accounts means that business owners start to make better business decisions.
Whether that’s saying NO to a work project because the profit margin is too low, or the payments terms will put too much pressure on cash flow.
Really Know Your Numbers
So, if you’re interested in getting a better understanding of your business and getting to really Know Your Numbers, get in touch.
We can provide you with a free set of management accounts which allow you to see where your business is at right now…
…and then we can have a conversation about how to improve your business.