Are annual accounts useful, or just a necessary document to file and required for tax?

Some people see accounts as a necessary formality and under appreciate how much information is contained in their accounts. More importantly how their accounts can help them to improve their business and increase profits.

Why are accounts useful?

Accounts are useful quite simply because they let you know how your business is doing. You can see what your turnover, net profits, tax liability and net assets are. 

There is also so much more your accounts can tell you, such as:

• What are the trends in turnover and profitability?
• How do my results compare to the previous year?
• What is my turnover, and can I build on this next year?
• What is my gross profit percentage? How does this compare to previous year? If it has gone down, is there something that can be done about this, such as increasing your prices or reducing costs
• What are my overheads? Are these well controlled or can I look at reducing / managing some of these costs?
• What is my net profit? Is this at a level I want / expect for my business? Can I do something to increase this next year?
• What are my net assets of the business?
• Is my stock or debtors too high? Is there something I can do to reduce these and turn them into cash?
• What are my creditors? How much do I owe people?

Accounts are also useful as they can be provided to banks / lenders who will make decisions based on your accounts.

When should I get my accounts done?

I would recommend you get your accounts prepared as soon as possible after the year end, so the information is still relevant. If they are done early enough, it will give you time to change things for the next financial year to improve and make things better. It can help you to understand what you have done well and what has not gone as well.

If you would like to discuss your accounts and help you understand them better so you can move your business forward, get in touch with us. You can contact our Carlisle accountant and partner, Lindsay Farrer on 01228 534371 or lindsay@saint.co.uk or one of our partners  at one of our branches.

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