This Makes My Blood Boil!
Feb 20, 2017
We're preparing accounts for a new client who's been in business for a couple of years as a limited company. When we got her previous year’s information from her last accountant, we were not amused. It turns out he has only done the basics for her, that is prepared abbreviated accounts and her Corporation Tax return. So she hasn't got a full set of accounts for the past two years which means she's got no Profit and Loss account and therefore has no information to use to spot trends or make business decisions with.
There are no Fixed Assets on the Balance Sheet, even though she runs a bookshop as well as workshops from her business premises. So she's clearly got tables and chairs, bookshelves, books, etc. Now how he managed to put together an ACCURATE set of accounts like this is beyond my knowledge.
This makes my blood boil, because accounts are not just there to keep Companies House happy or HMRC. They’re a wealth of information for you in conjunction with your monthly management accounts. You can use them to get Benchmarked against your competitors in the region and find out just exactly how you compare to them in over 30 different areas.
You can use them to do ‘what if’ scenarios and find out how you can achieve the results in your profit that you want and how quickly you can do this.
You can use them to spot year on year trends and predict pretty accurately whether you’re on track to thrive and grow or crash and burn.
If you’re not paying your accountant very much money they have to be cutting corners otherwise they wouldn’t be making any money. This accountant was charging very little to do the accounts but was spending very little time preparing them. If you want to grow your business you have to make sure you’re getting proper information from your accountant.
But also your financial information should not be something you put in a pile to give to your accountant at the end of the year. If you don’t know what’s happening throughout the year, it’s like driving without mirrors. It’s easy as long as you’re going forwards and don’t have to change lanes. But making any manoeuvres or reversing without them is a nightmare!