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The Basics Of Accounting

Accounting is definitely complex and for those who are new to it all, it can be a very overwhelming subject to get your head around. Whether a small or start up business owner, when it comes to finance it can be easy to look the other way and leave it all to your accountant but should you be that blind?

At Calculated Accountants our experience has taught us that, despite the incredible importance a healthy financial profile can have on a business, those in charge quite easily turn the other way and say “I leave it all to my accountant” but if you don’t know the basics, how can you be sure what your business needs, what it is getting and whether your chosen accountant is doing the best job possible?

We know just how complex accounting can be but don’t just turn a blind eye; make sure you know the basics as it could greatly benefit your business in the long run.  

Below are a few of the most popular terms and areas of accounting that all business owners should make themselves familiar with as you will no doubt be facing a need for them all...

  • Bookkeeping- This is the process of recording all business financial records. From incoming and outgoing expenditure, to records of accounts, cash expenses and business expenses; bookkeeping is a legal requirement for all businesses.
  • Payroll- Payroll finance deals with employee salaries. Dependent upon the size of the company, bonuses, tax deductions and so on, payroll can be quite a difficult task to seamlessly manage which is why many accountants offer their own unique services.
  • Tax Return- Yet another difficult part of business finance, a tax return is a detailed report on profits and is made up of a number of different items. As such an intricate process, expected to be sent to HMRC within a specific time frame- getting a tax return completed correctly and on time is often one of the main reasons companies of all sizes seek out accountants.
  • VAT- VAT registration, the accurate and timely submission of returns and pre planning is yet another financial requirement your business will face. Legally enforced by HMRC a vat return will show how much VAT is due on sales and how much can be reclaimed- yet another reason why many businesses turn to their accountants.
  • Year End Accounts- Year end is the closing period of a company’s financial year and requires the collation of the year’s financial information including profit and loss. Year end accounts are a fantastic way to plan and prepare for the coming financial year and to potentially minimise any future tax payments.

The above are just a few of the basic areas and terms of accounting that all business owners should make themselves familiar with. Whether you are the owner of a longstanding large corporation or are the owner of a start up business; the maintenance of healthy finances are crucial to the state of your success.

When it comes to your finances, never look the other way. By educating yourself just a little and remaining aware of what your business needs, you stand in a much better position to not only keep your business protected but to source the right accountant for the job too!

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