Accounts filing essentials for business owners
Have you seen adverts lately on TV claiming that software will 'check' your accounts or that they will do a VAT 'accuracy check'. Well, this simply is not the case as the check is only as good as the information being input by the user!
Not the best way to run your small business - we are not plumbers, hairdressers or architects - but we do know our way round a set of accounts. So why would you have a go at doing your own accounts? Seems crazy?
In addition, there’s a 'thing' happening for the last couple of years with regards to accounts filing - business owners saying that their accountants are too slow preparing the year end accounts - when it’s only a couple of weeks after the year end. So, a fellow accountant put this into a really good blog, for business owners to understand the process that happens and what's involved.
Going back a few years, accountants gave a pretty poor service and accounts were always prepared just before the deadline regardless of when information was received and thankfully a lot of practices are changing that or already have.
But the expectation has swung completely the other way and so accountants need to do a bit around education on what really happens as part of the process. Some think it’s just press a button and that’s it done which is not the case.
Here’s a bit of insight on what really happens:
• First of all there is a cut off period after the year end where you will probably still be receiving purchase invoices relating to the previous year and it’s not sensible to start accounts until after this
• Bank statements and credit card statements are checked against the system at the year end to ensure they match. Sometimes they don’t which means a bit of work to bring them in line
• All balance sheet accounts are checked against source documents
• If there are any errors they are corrected or highlighted to the business for correction
• Accounting adjustments such as WIP, Depreciation, Accruals, Prepayments, Deferred Income, Accrued Income are made
• Working papers are created that detail what makes up the balances as at the year end. These are more comprehensive than you may think and in some cases can take from a couple of hours to a few days to pull together to ensure the accounts are accurate
• Analytical review prepared
• A list of queries are compiled based on the initial work
• Queries are sent to the client and response awaited
• Once response received accounts updated
• Tax computation prepared
• Accounts and tax sent from the team member preparing to a director for review (quality check)
• Review points sent back to team member to update
• Draft accounts ready for client to look at and comment
• Any adjustments updated and final accounts sent out for signing
• Accounts filed
As you can see that is not just “pressing a button” and it’s a process that has to run for many clients simultaneously. Of course there are many accountants who do just press a button but the good ones know that’s actually negligent if the underlying work hasn’t been done.
I love that we are looking for accounts out early and that the dinosaurs 🦖 that prep them 9 months after the year end as a matter of course are becoming extinct.
The software providers who advertise on TV telling clients that it’s as easy as press a button and off you go have a lot to answer for!
That’s really not the case (if only)
Get a proper job done by a proper accountant. Job done.
Get in touch with Purple Accounts for a chat about your business today: email@example.com