Whilst statutory accounts will show you the “official profit” running your business from them is rarely a good idea and here’s why; profit can greatly differ from management accounts and is not even the actual profit charged to corporate tax. Corporation tax is calculated based on the figure from statutory accounts but passed through adjustments such as adding back depreciation, entertaining and deducting capital allowances.
Making sound business decisions requires accurate and timely data, you want to look at your accounts more than once a year. Waiting for the year end data doesn’t help if you need to make a decision right now. Due to the number of adjustments necessary, although correct from a technical point of view, the official profit will not give you a realistic picture of where your business is standing.
Management accounts are there to show you the true profit without any tax minimization adjustments. The profit from management accounts is the real profit and will help you understand how your business is really doing at any given point in time. Additionally, management accounts are crucial to financial planning because they can measure performance of the business against budget and set targets year over year. This allows you to prepare ahead of time to seasonal fluctuations for example and adjust strategy accordingly.
Our management accounts service is entirely bespoke. Every business is different and your challenges, most often unique. This is why we will create a distinct management accounting solution, tailored to your needs and help you set appropriate benchmarks to give you actionable insights. Contact us today to learn how management accounts can help your company.