Every year, companies regardless of size or type, are required to prepare and submit their annual accounts. These are yearly statements that provide detailed information on a business’ activities, finances, composition, profits, and other relevant matters. Major companies normally hire someone to do this for them; someone who is trained and experienced in making annual accounts. But it’s a different story for small businesses, especially the new ones.
If you are a small business owner, there are several things you need to know and remember to make sure that you come up with a good annual account. It is important to understand each tip to make sure that everything is in order.
- Understand what an annual account is.
Before doing anything, find time to understand what an annual account is and what it constitutes. As it contains a report or information about the company, it should more or less include the following details: business address, nature of business, list of officers including directors, shareholders, accounting records or financial statement, a summary of profits and losses, and a list of the business’ assets and liabilities.
Assign someone to take care of the annual account, but make sure that he/she is qualified to do so. The perfect choice would be an accountant and auditor team. The two can help each other ensure that everything is covered; that all requirements are ready. If you do not have an accountant or an auditor, find and purchase a good accounting software.
- Work on a checklist of accounting records.
Small businesses should have regularly updated accounting records. Together with your accountant, make a list of these records. Be sure to include the following:
- A list of your small company’s fixed assets, particularly the property where your business stands on. Also, include in the list all the equipment your company owns.
- Floating assets, which refer to unsold stocks and projects or work that are in progress, should be on the list, too.
- A list of your company’s debts and all investments, referred to as liabilities, should also be in the report.
- Information detailing the company’s payroll expenses.
- A record of the company’s purchases and sales, as well as bank statements and checkbooks.
- Meet and sit down with your accountant.
Before submitting the company’s annual account, schedule a meeting with your accountant. Sit down with him/her and review everything that was prepared. If there are things that need to be improved, work with your accountant and make sure this is completed at the soonest time possible. Don’t rush him/her as this might lead to mistakes. Everything in the annual account should be accurate and presented clearly. It is your responsibility to verify this.
- If you find an error in the report, carefully correct this by doing the following:
- First, verify the error.
- Check the company’s records alongside the error in the report. This is why you should have updated records the whole year ‘round.
- Once you have checked company records, carefully make the corrections. Work hand-in-hand with your accountant.
- Finally, check the annual account again to make sure that there are no other errors.
Once everything is in place, have your accountant submit the annual account. If your company is late in submitting, you can incur penalties.