How Do You Make Your Business Accounts Work For You?
A good car analogy is always useful ...
POSTED BY JONATHAN VOWLES ON 12/03/2019 @ 8:00AM
Every company needs business accounts to record information, to deal with VAT, employees and then file accounts ...
Your business accounts are important and a good car analogy is always useful!
copyright: siur / 123rf
But information is also the key to understanding the successes and failures of your business. Importantly, this information helps you to make appropriate business decisions to avoid future failures and capitalise on successes.
"Proper business accounts is not a luxury that
you can do without!"
Your business accounts is a necessity that you cannot afford to be without. So, how can you make it work for you rather than just being a recordkeeping burden? When you think of how this works for you and your business, think about speedometers and milometer.
Speedometer = Profit & Loss Account
In a car, the speedometer shows you how fast you are going and how quickly you are getting to where you want to go. This is equivalent to the Profit & Loss Account, which shows how fast your business is accumulating profits.
Both the speedometer and the P&L only make sense when viewed over a period of time, by comparing months against months, or years against years.
Milometer = Balance Sheet
The Balance Sheet, on the other hand, is like the milometer. A milometer records how far the car has travelled and is often used as an important factor in deciding how much a car is worth.
In the same way, your Balance Sheet measures how far your business has travelled. It is a snapshot of where the business has got to and gives some indication of how much it might be worth (but like the milometer it tells us little or nothing about how, or how quickly, it has got to where it is).
Ok, so now what? Now, you understand more about how to look at your business accounting system, not just as a collection of numbers, but as the speedometer and milometer of your business.
Often you need more information from your business, but this should help you to look at your numbers differently. Not just as numbers, but as information to help you to drive your business forward.
And, if you want better information about your business, we can upgrade you to performance management reports showing how you are doing by referencing more than just the profit at the end of the month.
"Would you like to know more?"
If you'd like to learn more about the right business accounts for you and how to get the best from it, then do give me a call on 01234 752 566 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking for a new accountant to help grow your business, do visit www.jvca.co.uk and discover how Jonathan Vowles Chartered Accountants can help you!
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.