Many businesses wait for their year end accounts to understand how their year has been, how much profit there is to distribute, and to find out how much tax there is to pay.
The year end accounts are the definitive answer to a lot of those questions, but most accounts aren’t ready for months after a year end, and some are prepared right up to the filing deadline. By the time you know how your year went, you may be as much as 9 months into the next financial year.
It means that a lot of small businesses are guessing how they are getting on, or using other metrics. Most small businesses that wait until after the year end to gauge performance are crying out for interim information, and dreading the unknown amount of tax that they are sudden going to have to find.
At OS Accounting, we want to make sure you have as long as possible to make provision before paying tax, and have as up to date information as possible. This is why our Annual Year End Accounts service is ready to go as soon as your records are ready.
For businesses that want to know how they are doing, as they go, we offer interim reporting and management accounting. This means that you have the luxury of experimenting with changing your business model in a year and can react quickly if it isn’t giving the results you expected. You can also check that your pricing is correct, and we can give a tax estimate so you can start saving up as customers and clients pay.
If you would like advice on management accounting or how it can improve your business, please contact us.
What is management accounting and its functions?
Management accounting is the production of a set of management reports or management accounts from financial information based on current information, rather than waiting for the end of a financial year.
This information is more current, and usually produced as a guide on how a business is performing though out the year. It usually is married up with budgets and forecasts to track performance.
What is the purpose of management accounting?
Management accounting is designed to give up to date financial and performance information, so a business can adapt to changing market conditions or re align their business model based on current information, rather than historical information.
What are the management accounts reports?
Typically a set of management accounts reports will be made for each business depending on what the owners, or business managers need to improve or measure performance. A set of management accounts reports typically starts as a set of standard financial statements, with a balance sheet, income statement or profit and loss account, and possibly a cash flow, without statutory notes, and commentary on the figures depending on the current objectives, budgets or forecasts of a business.
Management accounts reports may also have graphs, tables and metrics which display other relevant business information such as orders placed, or stock levels, which would not usually be found in year accounts. Management account reports tend to have more detail around the key performance indicators of the business they have been prepared for.
What is the difference between management accounts and financial statements?
Management accounts typically start as financial statements and then evolve as a business focuses on the important facts and figures relevant to their trade or market place. A set of financial statements, are typically prepared to show the profit position and a statement of assets and usually prepared for statutory or year end reporting purposes, and to comply with filing and regulatory requirements.
What are management figures?
Management figures are typically the financial or productive information that is interesting and relevant to the management of a business, but perhaps less interesting to other stakeholders such as investors or the tax authorities. A shareholder is unlikely to be interested in the details of the turnover of a certain stock line as it is too granular for them to make investment decisions, however for management it is vital to track demand and plan production going forward.
If you are struggling to see how your business is performing, or tired of waiting until the year end to find out if you had a good or bad year, OS Accounting can help take the guesswork out, and start helping your business grow. Contact us today to find out how we can help