As part of our statutory company year end accounts service in Walsall and the wider West Midlands, we know all about the dreaded end-of-year accounts that all companies need to submit and get right. These are a legal requirement, and getting them wrong or delayed can cost businesses and organisations big bucks and problems.
Whether you're carrying out a lot of the preparation yourself for an accountant to then just prepare and submit, or you are instructing accountants to deal with the whole process and other accounting services, here are a few ways to make the most of them.
1. An Annual Snap-Shot
They basically boil-down to an annual snap-shot of your financial situation over a year, and although they don't have a lot of detail like say Management Accounts do, they do have accurate and bottom-line figures to not only legally show the state of the company, but help intereprit how things are financially.
This is all in line with legal obligations like the Internal Financial Reporting Standards and UK Generally Accepted Accounting or Practice. In particular there is a Profit and Loss account showing what income and expenditure is, and a Balance Sheet with what assets and liabilities are held, with various other ancillary information like accounting Notes and Directors Report and possibly Auditors Report.
2. Know How They May Change
So although they all have the same principle as each other, the way in which they are formed can vary for different situations.
So for larger businesses and turnover there can be additional information and detail being needed, whereas dormant accounts are more abbreviated for companies where there is no real financial activity, and not to be confused with just 'non-trading' accounts.
3. They Link to Other Accounting Services
So to make these Statutory year-end company accounts happen, you’ll first need basic accounting information to hand and maybe a Trial Balance from a bookkeeper.
Along the way you can also have additional management accounts provided to help with more detail, and even a form of these accounts anyway for businesses or interest that don't legally need them like with a limited company.
Finally, there may be tax liabilities and resultant tax returns and corporation tax liabilities to then process.
4. Tweaks and Changes Will Effect the Year End Figures
This is where the expertise of a good accountant comes into play, where legal and helpful changes and adjustments can be made to ensure your accounts are the best they can be.
So provisions of bad debt and deferred tax can be made, and any outstanding loans and capital noted, and then reporting of any actual director transactions as well.
5. The End Purposes
The two main external authorities that will require these accounts are Companies House and HMRC, and often required in a set time frame of 9 months of the year end or 21 months for new companies.
Shareholders and Directors of the actual company will also need them, and they can be provided for over reasons such as the business taking on other commitments.
6. Make Sure They're Valid
This may sounds so simple, but it can be so easily missed - to make sure they're a right copy of the final copies. Not just drafts, but final ones which have been correctly signed and dated, and maybe even original copies.
Learn How to Navigate Your Way Around the Accounts
So in effect, the bottom line is that you can gauge your profit by how much income is above expenditure, and how much value by assets above liabilities.
But you then need to go beyond these to determine the full health of the accounts, for example if there are any bad debts or liabilities lurking around, and even comparing to previous years to see a pattern over time.
Therefore in short, make sure you firstly have the right form of statutory year end company accounts being formed with ancillary information, and that all the information and changes are correct. Then make sure these are correctly communicated to all the right people, and on time, and that the information revealed can actually make sense to them. Over forthcoming years you can then repeat the process and build up a nice set of healthy accounts for your company and business.