If you are running a business without the benefit of regular management accounts then you are almost certainly making your life more difficult and your business less effective and profitable than it could be.
Management accounts are the best way to keep track of the financial health of your business and, most importantly, its profits. With the help of your professional advisor at DonnellyBentley, here are just some of the outcomes that you might consider following a review of your management accounts:
Taking stock of your business’s current situation will allow you to introduce strategic changes in good time to minimise your tax payments and maximise your post tax income.
Buying new plant, equipment or vehicles
If you are thinking of making capital purchases, the timing can be very important. Tax allowances for capital purchases can vary significantly and may also be affected by the specification of the vehicle or equipment you buy. Reviewing your management accounts with your professional advisor will provide the opportunity to discuss your plans and optimise your decisions from a tax perspective.
Financing your business
Whether you are looking to increase your overdraft or seeking finance for a new project your bank manager will be more supportive of your plans if you are able to provide regular, up to date accounts.
Taking professional advice prior to your year-end will mean that you have more options available to you to maximise your personal income from the business depending on your business status. If you are self-employed you simply pay tax on profits regardless of the amount you pay yourself. As a Limited company, your directors and shareholders pay tax on the salary or dividends they take. Dividends, however, do not attract a National Insurance charge. Don’t leave it too late and miss out on year-end planning opportunities.