When it comes to managing your finances and taxes, having a qualified accountant by your side is massively beneficial, particularly if you’re not confident managing them yourself. However, in order for your accountant to work their magic and provide you with accurate financial advice, they need specific information from you. If your accountant isn’t asking for certain essential documents, alarm bells should be ringing and it’s time to raise some questions.
Failing to provide necessary documents could lead to some nasty surprises, like having your account frozen. This is a massive problem for any individual, but for businesses, it can have disastrous consequences and chain reactions.
To help ensure you don’t get tangled up in any tricky situations, we’ve outlined the crucial items your accountant should request from you and why they are so important in preparing your accounts.
Why would an account get frozen?
Before we dive into what information your accountant should be requesting, let’s take a quick look at why an account could get frozen.
One of the reasons an account could be frozen is if it’s being used for personal transactions instead of business purposes, raising concerns for suspected money laundering. This highlights the importance of making sure you have separate business and personal bank accounts.
Additionally, excessive transactions on a personal bank account can raise alerts with the bank, drawing attention to potential irregularities. In some instances, discrepancies between your tax return and your bank account activity may also trigger scrutiny. This is why it’s vital that you make sure your accountant is asking for the right information and that you’re providing it in an accurate and timely manner.
So, what should your accountant be asking for?
Bank statements and receipts
Forgive us, we know this is an obvious one, but it’s vital that you provide your accountant with bank statements and all business-related receipts. Bank statements provide a detailed breakdown of your transactions, making it easier for your accountant to track income and expenses. Receipts, whether digital or paper, provide concrete evidence of your business-related purchases, enabling your accountant to claim legitimate deductions and optimise your tax return.
Sales and purchase invoices
To maintain proper records, your accountant should request your sales and purchase invoices. These documents provide a comprehensive overview of the transactions made by your business. It can be very helpful to take advantage of technology and store this information in a digital platform, such as Xero. This can assist with streamlining the accounting process, making it more efficient and reducing the chances of errors. This brings us to our next point!
Access to your digital accounting platform
If you use a digital accounting platform to manage your finances, it is definitely worth granting your accountant access to it. This access allows them to review real-time data, make adjustments, and reconcile your accounts without relying solely on the documents you provide, which can easily get damaged or misplaced. It also ensures that both you and your accountant are on the same page, promoting better collaboration and accuracy.
For businesses operating a cash register or till system, till receipts are essential pieces of evidence. They can help track daily sales and cash transactions, aiding your accountant in ensuring all income is properly recorded and accounted for.
Don’t forget to check your own accounts too
While accountants play a critical role in preparing your tax returns and managing your finances, the ultimate responsibility for the accuracy of your returns lies with you. HMRC makes it clear that you must check the details on your returns are correct.
Even if you have a highly qualified accountant, it’s crucial not to solely rely on them and become blind to your own finances. Take an active interest in your accounts, be aware of your tax obligations, and ensure you provide your accountant with all relevant information.
Looking for an accurate and reliable accountant? Contact us today to arrange an appointment and find out how we can help.