Nearly all businesses need to prepare regular management accounts in order to monitor and control their finances and trading activities. This internal reporting is so important when managing your business, especially as it grows in size.
Showing income and expenses on a monthly basis makes it is easy to detect trends and see when and where the more material items are arising. If your business loses a couple of major customers and starts trading at a loss, this can be picked up straight away.
Apart from running the business, there are other good reasons for preparing regular management accounts. Your bank will probably want to know how the business is getting on if you have an overdraft, loan or merchant account. They can even be used to negotiate better credit terms with your bank or suppliers, assuming that they paint a good picture of course. They are also useful for declaring dividends. Unless your accounts for the previous year show a sufficient level of retained profits, it will be necessary to prove that dividends come out of distributable reserves. You can only do that if you can show that you have made enough profit since the year-end to cover the excess. Otherwise they could be overturned and treated by the Revenue as participator loans, or even worse as remuneration subject to PAYE.
This also helps us estimate future tax liabilities, which we can help reduce for you by tax planning strategies.