What are the first steps you take when you start doing management accounts for a client?

The first step is to do a Budgeting and Forecasting session, which clients always find highly beneficial. You're breaking it down to a granular level and looking at it on paper, allowing business owners to see their business from another perspective. There's something very refreshing about figures because they are black and white. You can't argue with them.

Once you have the figures, you can set your targets. Various psychological studies have shown that targets can have a huge impact on a company or an individual's performance, especially when you have someone holding you accountable. If a client promises me that they're going to make a change and they know that we'll be sitting down together at the next quarter and asking how they get on, they're much more likely to have achieved it.

I always advise my clients to share these targets with their team. If your team understands why you need them to make more sales within a specific time limit, they will likely hit their targets.

Can you give an example of how it works in practice?

If you're a letting agent and you have 40 houses on your books, you charge the landlord a set amount based on the total. So, let's say you have ten houses where you make £500 profit per year, 20 where you make £600, and the remaining 20 where you make £700 profit per year.

We would thoroughly analyse your financial records to assess how your performance this year matches your performance in previous years. Have you got any new landlords in? Have you lost any landlords that you're aware of? Did you let out all the stock you had last year? We also compare your performance against that of your competitors. We discuss whether you will increase your profits, either by raising your prices or by increasing your number of properties. We would then calculate the difference this would make. If you didn't let out all of your stock, then that's your focus.

When is the best time for me to book a review meeting?

It's best to book a review meeting a couple of months before your year-end so that you have a clear strategy for your next business year. Even if you don't have a team, crystallising your strategy in your own mind makes such a difference. Ideally, you will look three years ahead. Of course, this can be adapted or revised along the way, but it's imperative to have a plan.

What's the difference between the clients who choose your Management Accounts service and those you don't?

About 30% growth! In my experience, the growth rate is even faster. The business owners we work closely with via our management accounts package usually grow exponentially, especially if they quickly take our advice on board.

Our management accounts package can also be an essential wake-up call for business owners. One client I worked with was doing well, so he cancelled his regular revies and management accounts service. However, he then took his eye off the ball, and his business got into trouble, as he'd overspent and, in some ways, became complacent. Luckily, we created a crisis management plan for him, and with tremendous dedication, his business is now back on track. However, this was unnecessarily stressful, costing him more in the long run. He now books in for regular business plan reviews.

Many owner-managed businesses would benefit from management accounts, and I'm always surprised that more clients don't take this option. I've had clients who have gone bust, which is really sad, especially when they didn't see it coming. It's always much better for your employees and customers and, of course, for your own peace of mind to wind up your company properly.

As your accountant, we do everything in our power to keep our clients informed, especially if something doesn't look right. Still, if times get hard, a company director can become swamped, and they might not be able to provide our team with the basic information they need to complete their accounts. Even with our timely reminders and understanding time, we can only complete the accounts when we have all the information, so by the time we get this, it can often be too late for us to help. Unfortunately, then, it's just a case of damage limitation.

How do I know if it's the right time to retire or close down my business?

This is a common question among entrepreneurs and company directors. It's a tough decision to make, especially when you're under pressure and if lots of people are relying on you. You don't have to shoulder this decision alone. Statistics show that business owners with a business plan are more likely to close their business at the correct time. While this may seem counter-intuitive, we can clearly analyse whether the business can improve with a new strategy or whether progress is unlikely. Closing down a business is never a decision taken lightly; most of the time, we can develop a new strategy together.

Do I need to tell HMRC if I employ someone new?

Yes, you need to inform HRMC whenever you employ a new member of your team or whenever their circumstances change – ie salary or job status.

Do I need to keep records of my employee payslips?

Good record keeping is essential as this forms part of your annual report to HMRC each year, which summarises the annual pay and deductions for each employee. It’s imperative that all financial records are held securely with a cloud accounting solution, which ensures that your data is backed up and incorruptible.

Tax law specifies that accounting records must be kept for at least six years from the end of the last financial year they relate to.

When does payroll need to be submitted?

HMRC requires employers to submit RTI—Real Time Information—each time they run payroll. This must be submitted on or before the date that the employees are actually paid. This ensures that HMRC has accurate information and helps prevent errors and fraud. PAYE deductions are due to be paid over to HMRC by the 22nd of each month. At the end of the tax year, we also provide a P60 for each employee, summarising their annual pay and deductions.