All Wolverhampton businesses, whether large or small, need to keep a record of their accounts. There are two main reasons for this, the first being that it is a legal requirement. Companies must declare their accounts to the government HMRC in order for their tax payments to be calculated, therefore they must be accurate. Also, accounts are used to assess the current state of the business and how it can move forward in terms of revenue.
The history of accounting is long and varied, stretching back over 7000 years when it was first carried out in order for farmers to keep a record of the abundance of their crops and livestock. It has come a long way since these primitive methods and accounts are now both legal documents for external parties, and used as indicators of the success of a business used by internal factions.
Management accounting refers to the auditing and analysis of accounts for internal use by a business. It is generally undertaken for the benefit of managers or decision makers in the company, in order for them to make informed decisions about where to take the business in the future. Rather than focussing on simply creating and recording historical account data, management accounting analyses these records and uses the information to aid future business decisions.
Management accounts do not need to be reported in any standard format. As a result of this, there are a number of different pieces of software that are available to complete this task; which one to use is down to personal choice. The fact that there is no specific method to completing these accounts means that they can be manipulated to show exactly the areas of the business that the managers would like to see; for example only the marketing section, or reports from a specific three month period.
Financial accounting is the traditional type of accounting which records the accounts of a business for the financial year. The whole business is accounted for, not simply sections of it. In contrast to management accounting, financial accounting is carried out for outside parties; HMRC and shareholders for example. Because of this, there is a specific format in which these accounts must be presented, known as the GAAP (Generally Accepted Accounting Principles). places of visit . These documents are a legal requirement by HMRC and as such need to be completed annually and to the accepted standard.
All businesses in the Midlands, no matter what size, need to complete these accounts. Most businesses will not have the expertise or resources to do these alone and therefore look to outsource the work to Wolverhampton accountants. As business accounts are an integral part of business, and indeed a legal requirement, it is imperative that you choose a Wolverhampton accountant that you can trust.