Are YOUR Accounts fit for purpose?
Most businesses have Accounts created for one reason; to work out how much tax they’ll have to pay. That’s fine, but before your Accountant starts work, they should understand your plans for the future. Your Accounts need to be fit for purpose!
What do we mean?
Well, there ARE times when it can make a real difference for the Accounts to be prepared with another goal in mind. A lower tax bill is not always the ideal focus.
For example, I was chatting about different finance options with someone last week. He has big plans for the next twelve months, and will need a loan or finance of some kind to make them happen.
Knowing that, I suggested that he speak to his current Accountant to make them aware of his plans BEFORE they start work on the next set of Accounts. The Accounts need to be prepared with that growth plan in mind and to show the best possible profit position to ensure that a finance application is as painless as possible. (We obviously also talked about Management Accounts, Business Plans & Cash Flow Forecasts , all of which can also help support any application!)
This approach to Accounts is unusual, but essential in this situation. It may result in a slightly raised tax liability, but this is worthwhile given the future plan for growth and acquisition.
When else might this approach be relevant?
A similar stance should be considered if you have plans to sell your business. This will ensure you reap the maximum rewards from the effort you’ve put in over the years.
How do I make sure my Accounts are fit for purpose?
Your Accountant should have a really good idea of your goals for the business, but if you don’t have regular conversations with them, make sure you tell them now! They may be used to you wanting to minimise your tax liability, so a change may be unexpected. Your Accounts really must be fit for purpose, and that purpose must be the right one for your business!
If you’d like a chat about taking a different stance in your Accounts, do get in touch. We can also help with finance applications or to prepare a business for a profitable sale, so if those are on your horizon, do give us a call!