Welcome
We pride ourselves on being a leading independent firm of Chartered Accountants and Tax Advisors, providing clients with practical and realistic business advice. Not only are we committed to a high standard of service in accounting and taxation matters, we aim to provide our clients with information that may be important to the running and development of their businesses through advice on a wider basis, helping them to achieve greater efficiency, profitability and cost reductions.
With specialised consultants and professional staff, our clients are located in and around the Birmingham area. Our aim is to provide comprehensive, Fixed Fee accounts and taxation services to small and medium sized businesses; this includes family owned companies, contractors, partnerships and sole traders.
The Fixed Asset Register: A Beginners Guide
Within the wider framework of keeping a company’s books there sits a plethora of different accounting methods and record keeping processes that have to be used. Some because there is a statutory requirement, others by virtue of good common sense. Into the first category falls the FAR or ‘Fixed Asset Register’, the Companies Act of 1956 means that it is mandatory for companies to maintain a Fixed Asset Register as part of their general business bookkeeping.
The Fixed Asset Register is quite simply a record of the chunk of a company’s assets that constitute its ‘fixed’ assets; fixed is the term used to describe assets which cannot easily be converted into cash and are not held for the purpose of selling them on; assets that are owned to enable a business to function, either to provide a service or produce a product; in the case of manufacturers it is usually machinery, land, property etc. and for service providers, equipment and premises; it can also include less tangible assets such as copyrights, patents and trademarks.
The reasons for the existence of an individual register of this kind are many; the Government’s interest lies mainly in always knowing the value of a company’s fixed assets for taxation purposes, hence the legislation, but there are other benefits to knowing the separate costs of such assets not least for the purposes of a company’s insurance.
However this record is not a simple list, it collects very specific data in a precise and detailed way and the way that it is recorded can tell those who understand FAR a lot at a glance. In addition to detailing the nature of a company’s fixed assets, the bookkeeper must account for loss or impairment of assets as well as logging the ongoing condition and changing value.
Keeping track of the exact origins of large assets can be problematic for the person keeping the records, as it can involve physical verification, which, as the name suggests would mean physically finding and visiting each piece of equipment or building to confirm its existence and location; most bookkeepers therefore ‘tag’ each asset in the register with an engraved alpha-numeric identification number to make tracking simpler; of course in the case of land and vehicles there will conveniently already be independent registration numbers.
Part of the recording process includes logging the assets’ value in the form of an assigned ‘carrying cost’, in order to do this a valuation has to take place; the carrying cost is usually set at either the current market value, the potential sale or realisable value or the distress sale value, which basically refers to an asset’s scrappage value.
Most bookkeepers and accountants who have the task of maintaining the Fixed Asset Register do so nowadays with the help of specially designed computer software; these programs can produce reports on demand and collate large amounts of information. Although they do not necessarily make the job of keeping the FAR up to date a simpler one, they certainly can make it less time consuming, which in turn helps with the accuracy of these important and required records.
Taking Stock: Exercise Good Stock Control
If your business is one that produces a physical product to sell on to customers, stock control will be at the forefront of everything you do. At any one time you will need to have a grasp of your stocks of supplies of raw materials needed for the production of your product, stocks of incomplete products still being made and of course the stocks of finished products ready to sell.
A vital balancing act takes place in order to minimise holding costs, whilst ensuring that stocks of sale-ready products do not run low and this balancing act involves everyone from the stock controllers and purchasers to the marketing department. Sales forecasts from the marketers help the purchasing department estimate what stocks of raw material to buy in, but everything from seasonal variations to unexpected demand can send this sort of careful planning in to mild chaos.
Although most companies will keep extra stock in to prevent running short, not all industries allow for this possibility and the stock control dance becomes even more delicate. Those manufacturers who produce perishables for instance cannot necessarily sit on large quantise of either ingredients or finished product, as the life of their product may be limited.
Getting your stock control system wrong can result in expensive overstocking, or ‘stock-outs’ where you cannot meet customer demand. Overstocking will mean having to find money to pay for warehouse space to store stock as well as insure and secure it all of which could result in cash flow issues. Allowing raw materials to run out could result in having an idle workforce or loosing customers who may reach out to a rival supplier for help and give their business to your competitors.
If you are a small business the issues of stock control become even more significant and yet even more difficult; cash flow is of course important to all firms, but to a small business a cash flow crisis could mean its demise. The small business relies on its customer base for survival and having to close its doors for any length of time could result in a loss of hard won customers that again could majorly damage trading.
In these days of technological wonder it is probably wise, regardless of your size, to utilise a computerised stock control system that can keep track of every stock stream at once and product almost instant reports for the various departments that need them; these systems can also help the small business owner to run complex stock control without the help of others.
There is no one single method of stock control, rather, there are many, with a few standing out because of their common use and general success, and it is choosing the right method for your business that is the key to making stock control work for you.
Whether you opt to use a popular system of stock control or one you have devised yourself it is important to make a decision early in the life of your business and stick to it, most disasters can be prevented by being consistent and following through with your plans.
Bookkeeping Services for Your Business
Bookkeeping is one of the most important parts of making a business successful. It is of course possible to run a business which has substantial costs, but if these costs are left to spiral out of control and exceed the revenues, then you will probably make a loss and at the same time be ‘out of pocket’ in cash flow terms. A majority of business owners are not sure how to select a suitable bookkeeper or bookkeeping service for their businesses. Detailed below are a few helpful hints to bear in mind when choosing a bookkeeping service for your business.
Choosing the best bookkeeping service depends on the size and the type of the business and there are a number of options that are available. Some business owners may be willing to input the basic information into a computer by making use of bookkeeping programs such as Quick Books or Sage and others may just collect the receipts and the bills and take them for processing to their accountant.
Therefore, choosing the best bookkeeping service greatly depends on how much you are willing to do yourself for the business and on the level of service you need. There are business owners who use a full service bookkeeping service, while others prefer to use such a service only for taxes and payroll.
When you choose the bookkeeping service for your business, you should try to get one which suits your particular type of business or industry. For instance, there are specific accounts packages for doctors and letting agents. Therefore, if you are looking for a full bookkeeping service for these types of businesses, it would be a good idea to find a bookkeeper or accountant who specialises in these industries. Furthermore, it would be sensible to also check whether the bookkeeper or accountant have adequate personnel to help you whenever you have questions. You will have to establish from the beginning if they will come to your location or if they will be downloading all the information from your computer and processing it back at their office. Indeed, where you prefer them to undertake the bookkeeping will depend on the space and resources you have available, as well as practicalities of being available to answer any immediate questions any service provider has.
Recommendations are a great way to find a reliable bookkeeper and bookkeeping service. Ask friends and family or business colleagues who they use, as they will hopefully be able to give you an honest opinion. Any bookkeeper you choose should have a good grounding in accounting standards and basic tax laws. Most importantly you will need to feel completely comfortable when discussing the finances of your business with them. There is nothing worse that ‘frozen communication’ between a bookkeeper or an accountant and a client.
The best bookkeeping service for you and your business is one where the bookkeeper is honest, dependable, understands your business or industry, understands the fundamental accounting and tax treatments for transactions, and is able to communicate efficiently and effectively with you in a comfortable manner.
How Management Accounting Can Be Used to Help Your Business
Management accounting is the technique of gathering and recording information which aids the decision-making capability of management. Indeed, management accounts can help management and business owners make better operating and strategic decisions. Furthermore, banks and other financial institutes sometimes require management accounts on a regular basis to assess their continuing lending terms and conditions.
A good management accounting process is one that helps to tackle four key aspects of a business:
- Planning
- Directing
- Decision Making
- Controlling
The following are ways in which management accounting can help a business:
- It provides accurate information related to the budgeted and actual figures, thus enabling the managers and business owners to take proper cost controlling measures.
- Provides timely feedback related to current operational activities, therefore helping in reassessing the operational decisions and gaining better control over the activities of the business.
- Assists in measuring the performance of various departments and sub- units within an organisation. This information can then be used to identify and reward the better performing departments and employees. For example, a certain employee may be responsible for higher sales figures than expected and as a result you may choose to promote him or her to oversee the other sales staff.
- Helps management or owners do a complete 360-degree analysis of the organisation. In this sense the management accounts can provide very useful information when looking at the business plans of an organisation and when carrying out any SWOT analysis (the Strengths, Weaknesses, Opportunities and Threats facing a business).
- Identifies profitable and non-profitable products or services. For instance, this can help speed up process of discontinuing a certain product that is making a loss and this in turn will can save money.
Management accounting not only covers financial records but can be applied all over an organisation’s activities to identify areas where things may be going wrong and need improvement. It is a vital tool in helping businesses achieve their goals and for streamlining any processes which are inefficient.
Management accounting should not be seen as something just larger businesses need to do. Any business, no matter how big or small should prepare some form of management accounting information, even if it is just written down on one piece of A4 paper. Management accounting can give you a “snap shot” of how your business is performing throughout the year. It will allow you to compare your actual performance with the expected performance, help you make improvements to your business and streamline your future plans.
Keeping it in the Family – How to Help a Family Business Succeed
Accountants in Birmingham – Family Business Advice
All businesses have a life span, and all move from their inception through various phases until they either end or are converted into different entities entirely.
For most business owners, their relationship with their business will also have a natural duration, from the time that they acquire or start the business to the time that they close or sell it, but for a family run firm there is often something else going on that puts a whole new spin on things. Sometimes the business has been handed down through many generations, from parent to child perhaps, and often the expectation is that this legacy continue in the same vein for further generations to come; because of this emotions often run higher in a family run business than they ordinarily would, as far more than simple time and money is invested in the venture’s success.
To add to the emotional mix, we quite often see family members working along side each other, day in and day out, spending their entire working lives in very close proximity to their nearest and dearest; this, of course is sometimes the strength of family run firms, but it can also be a volatile cocktail.
However hard it may be, it is therefore, quite sensible to attempt to emphasise the ‘business’ part of the family business and try for a more professional work environment.
There are a few things that can be very effective when endeavouring to run your family business with less domesticity:
Work/Home Divide
Even business owners who don’t work with their families can have trouble with this one, but, if you are employing relatives or working alongside a partner or child, having a time and place for domestic matters and a separate one for professional can be a life saver. No matter how easy it is to carry on the row from breakfast during your working day, it is incredibly important to save it for after your working hours, and conversely don’t expect to sit around the dinner table and have an informal staff meeting, a family life that is kept just that will provide a refuge from the stresses of work.
Formalise It
Just because your manager is your sister or your payroll clerk is your cousin, it does not mean that they should be working without the protection and benefits that other staff usually enjoy. Having contracts in place will give you all a professional document to act as an inanimate intermediary should problems arise.
Outside Assistance
Although it is tempting for many reasons to staff every role in a family business using family members, it can be a useful tool to employ specialist help for roles requiring particular know-how; not only will it mean that you don’t end-up with an unqualified relative struggling with a job that they are not fit for, but it will also bring in non-family members to redress any bias the business could be suffering from.
There is obviously a certain strength in family firms that allows so many to thrive for generations, but this type of working is not for everyone and for every family business success story, there is a tale of the child who went his own way and upset the apple cart. It is therefore worth remembering that just because Grandma made the firm a success does not mean you automatically can; just as with any other business, the family business will only succeed with plenty of hard work.