Accounts
Accounts services in Bracknell
Although some types of business are not required to prepare annual accounts (known as statutory accounts), a profit & loss account preparation will help them understand their operational efficiency. Financial accounting reports the financial status of the business as well as financial changes at a particular time. The profit & loss account, as the name suggests, also offers a snapshot of how profitable or loss-making the business is. Moreover, having a profit & loss account prepared allows business owners to understand the various expenses incurred and any of which needs close scrutiny and control. The balance sheet, however, shows the business assets, liabilities and equity at a particular date.
M&W Accountancy Services provides top quality accounts services to all small and very small business types. Our team of dedicated & dependable accountants are experts in a wide range of practice areas. Whether you are an individual or a corporation, we have the experience, expertise and results-driven mindset that you need on your side.
Some businesses (e.g. sole traders or partnerships) may prefer to have their business accounts (a profit & loss account and balance sheet) prepared so they may ask an accountant for the accounts services even though they are not required or obliged to do so.
Having a profit & loss account prepared will help business owners track their financial performance and make informed decisions about their operations. It also helps them learn:
1. whether or not their business perform well;
2. which products generate higher revenue so more funds should be allocated for their promotions; and
3. which products perform very poorly so the operations should be discontinued
The profit & loss account also shows how business expenses are spent. Some expenses are not deductible for tax because they are not wholly and necessary for business. Further, expenses that are disproportionately high will need close analysis and control.
The bottom line of the profit & loss account lets business owners know how profitable or loss making they are.
The balance sheet, on the other hand, allows business owners to know their business’ financial position at a given date. It also helps them evaluate their buusiness’ financial standing.
Business owners will not be able to understand all of these unless they have their accounts prepared.
While a profit & loss account summarises the business’ revenue and expenses for a specific period of time (e.g. for the year ended 30 June 2022), the balance sheet shows business value (assets, liabilities and equity) at a particular point (e.g. as at 30 June 2022).
Our accounts services are reliable and the fees are affordable. Talk to us today and we are more than happy to help.
Limited Company
A private limited company is a separate legal entity from its shareholders or members. This mean a company can, for example, sue and be sued or buy, sell and own assets in its own name and it is liable to pay tax separately from its shareholders.
Annual or statutory accounts, which consist of a profit & loss account and Balance Sheet, are a legal requirement for a limited company. The company must both prepare and submit their company accounts annually to Companies House. The deadline for filing the accounts of a private limited company is 9 months from the company accounting reference date (company year end). For a company with a year end of 31 March, the accounts must be filed to Companies House by 31 December.
Further, a company must attach their accounts when their corporation tax return is submiited to HMRC. A dormant company is also required to file its accounts to Companies House annually even if the company has no significant transactions in that year.
There are penalties for late filing the accounts. The penalty depends on how long the accounts take to reach Companies House. The longer the accounts are submitted after the deadline, the higher the penalty. Not filing the company annual accounts is a criminal offence and directors or LLP designated members could be personally fined in the criminal courts. The company risks being struck off as well.
Some small or very small businesses may choose to do the accounts themselves when starting a business, likely because they can save the accounting fees. But from our experience these accounts are not always so correct. This is maybe due to a lack of accounting knowledge and skills. But they finally seek help and look for accounts services from accountants after just few years.
If the accounts are not correctly prepared, they do not show true and fair views of the business and cannot be relied upon.
Sole trader & partnership
Unlike limited companies, there is no legal requirement for sole traders and partnerships to prepare and file their business accounts with Companies House. This is because there is no distinction between the sole trader and their business. In other words, the sole traders and their business, in legal terms, are treated as the same person and so the business owners are responsible for all the debts incurred in their business. This means their personal assets and finance are not safe and can be used to pay for the debts they owe their business creditors or any legal suits against their business if their business assets or funds are not enough to cover these.
This rules that apply to sole traders also apply to a general partnership because a partnership business is not a separate legal person distinct from its partners. That means all business partners are jointly and severally liable to their partnership debts. Both sole traders and partners, therefore, have unlimited liability for their businesses.
Further, neither the sole traders nor partnerships are required to attach statutory accounts when their self assessment tax returns are filed with HMRC. However, they may seek accounts services to have their business accounts prepared so that they can understand the performance and value of their business. The profit and loss account will help self-employed individuals and partnerships when they prepare their tax returns. It will make filling in their tax returns much easier too.
Need accounts services?
If you are looking for accounts services to help with your statutory accounts preparation and submission, please contact us for free initial advice and see how our expertise and experience can help your business meet the deadlines. You will be happy with our reliable services.