How you can account for your figures

Ian Tongue looks at how accounts are prepared and provides some useful tips to interpret the figures.

Everyone carrying out private practice should be preparing accounts and a tax return, but the figures prepared can be daunting to understand. Yet, ultimately, you are responsible for the figures submitted to the tax inspector so it is important you understand them.

Private practice accounts

Make sure you meet with your accountant periodically to go through things you are unsure of

These are a record of financial performance and are prepared up to a financial year-end. This may be in line with the tax year-end for individuals of 5 April – more commonly 31 March in practice – but could be any date during the calendar year. 

Sometimes, there are cash flow advantages to adopting a financial year-end that does not coincide with the tax year-end, but your accountant should discuss this with you.

The records kept by the business are extremely important to ensure that complete and accurate records are being maintained. Your accountant does not ‘audit’ your figures, but, they should be bringing to your attention any deficiencies or problems that they come across.

Annually, your accountant will ask you to submit your records and, as a minimum, they will produce a summary of income and expenses; but for companies and larger practices, a balance sheet will also be prepared.