Numbers, decisions and seeing the big picture; some factors which contribute to the success of a business.
Businesses need to know different numbers, not just numbers extracted in Real Time, but other figures which are forecasted such as budgets and predictions. Not only do businesses need to keep an eye out on their own figures, but knowing the figures and benchmarks of the industry they belong to is also important to remain competitive.
A decision can only be made when all the numbers have been analysed, especially for those decisions which affect expansion programmes and obtaining extra finance. Having real time information at your disposal is imperative to making the right decision. Therefore having the right figures in front of you is essential in making the right decisions leading to success of a business.
Directors have a duty to ensure the company is meeting the legal requirements set by statue. Accountants can advise on how to achieve these duties and can point them in the right direction, however the overall duty remains with the directors. There are legal requirements for nearly all transactions undertaken by a company; from paying a salary, issuing dividends, paying interest on loans and treatment of VAT on expenditure. Knowing when to convene meetings, when notices should be issued, treating minority shareholders correctly; these are some of the issues directors have to be aware of.
Where directors are following the legal requirements, it follows that the business is heading in the right direction.
With cloud accounting on the uptake by both businesses and accountants, the availability of Real Time information has never been easier. There are many cloud accounting providers on the market which simplify the steps taken to record a transaction. With bank account streams connected to the software, businesses can see the exact effect a potential transaction could have on the success of a business.
Businesses should ensure they have back up documentation which supports each transaction, as without that HMRC may enter into protracted negotiations with the business on the deductibility of an expense, which could prove costly to the business to defend.
Even where a company has ensured it has filed the relevant returns and forms, a company can still be at risk of being liquidated or wound down where it hasn’t paid its tax liabilities. Many businesses view as keeping up to date with their compliance a priority, which is good for them. Where they fall is when tax liabilities cannot be settled on time or in full due to the inability of the business to manage its cash flow effectively. Tax liabilities could include corporation tax, PAYE, VAT and tax on interest.
Businesses can manage their cash flow in many ways and we have previously written a post on it titled Small Business Cashflow Tips .