Management Accounts & Business Tax Planning
Management accounts are a set of financial statements prepared either monthly or quarterly, which provide a clear insight into the financial trading position of your business.
They aren’t required by law, and they don’t have to be filed with HMRC like financial accounts but, they’ll put you more in control of your finances than ever before, supporting the growth of your business and allowing you to decide what information you want to include.
When it comes to the information they should include, there is no one size fits all approach but to be most effective the information should be tailored to your business.
They most commonly include:
- Executive summary – a summary of the month’s highlights
- Balance sheet – a key financial statement detailing your assets, liabilities, and equity at that point in time.
- Cash flow statement – a summary of all money in and out of the business, highlighting any shortfalls.
- Income statement – a statement outlining the company’s income and expenditure to show a profit or loss.
- Key performance indicators (KPI’s) – an assessment of performance against your KPI’s
- Capital expenditure – an outline of money spent on fixed assets within your business.
- Actions and contingency plans – a plan to identify your company’s worst-case scenarios to minimise loss.
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Why Do You Need Management Accounts?
Management accounts give you the financial information you need to manage your business effectively and make informed decisions, allowing you to see if you are making enough profit or help put you in control of your business expenditure.
Management accounts help you:
- Collate up to date information – by having an accurate overview of your business one day, you can make better decisions the next.
- Have greater control – you are able to identify trends and make comparisons to previous years. You also have more control over costs from studying management accounts and identifying areas where you can spend less but achieve the same result.
- Grow your business – Having all the relevant information recorded helps you plan for growth, diversification, or expansion.
- Improve your cash flow – by including a cash flow forecast you are able to see what is coming in and going out of your account over a period of time to avoid any unexpected expenditure.
- Plan Tax – Accurate and up-to-date information on your business enables you to plan your tax liabilities better and helps lower your tax bill.
- Reduce Year-end audit and accounting costs – management accounts will flag up issues and queries that can be resolved at that point in time rather than trying to resolve everything year-end.
Who Uses Management Accounts?
Management accounts are used primarily by business managers to help them plan and implement day-to-day operations for their business. They are not compiled and used in any particular business or industry but just by any business that requires planning, budgeting, or analysis of income reports.
What is the difference between management accounting and financial accounting?
Management accounts are more for you, providing you with a generic look at your financial information, going beyond numbers to reveal key insights about your business performance to encourage strategic planning, set realistic goals, and encourage efficient directing of company resources.
Financial accounts on the other hand are much more concerned with informing those from outside the business. Financial accounting is designed to disclose a business's performance and financial health and mainly created for investors, creditors, and industry regulators.
How HUSA Can Help With
Here at HUSA, our experienced and qualified accountants can help you with your management accounts to help your business succeed. We will assist you to examine your financial statements and pull out data, patterns, or discrepancies which are valuable for decision making.
By choosing HUSA Accountants we will save you time and money compiling your accounts and committing to the long-term employment of an experienced management accountant. We tailor our service to support the exact requirements and goals of your business to gain a valuable and objective view of your management accounts whilst avoiding the risk of internal politics and managerial bias.
Whether you run an SME business or a large corporate business, HUSA Accountants are here to help you drive your business forward. You can book a free no-obligation consultation today to help us understand your specific management needs so that we can devise a quote tailor-made just for you. Contact us today on 0121 603 3333