Company accounts are a much maligned element of any business, with many people feeling that they're a real drain on their time. If you want to manage yourself or your business to the best of your ability though, keeping proper accounts can be the strongest weapon in your business armoury.
Does everybody have to keep company accounts by law?
This is a very good question and one that you really need to know the answer to. Not everyone is required to keep company accounts; if you're self-employed it's not a legal obligation, but if your company is limited then there's no getting away from it. The same rule applies if you're a partnership made up of any limited companies too - you must have official company accounts produced at the end of every financial year.
While the above may be true though, any accountant worth their weight will advise you to keep accounts regardless of your legal position. For starters, they will make it much easier to organise your tax return - and it doesn't matter what kind of business entity you are, you can't avoid HMRC! If you feel that you haven't got the time to spare every month to produce some kind of financial records, you're just as well to hand the job over to the professionals; an accountant isn't necessarily an expensive outlay, and if your time means money you can actually find that it's cheaper than doing it yourself.
Other benefits of keeping company accounts
Regardless of your legal position, even freelancers can reap the benefits of keeping proper accounts. Having real time financial information will provide the data you need to help move your business forward and reduce your outgoings. By having this reference of your income and outgoings, your accountant should be able to offer advice on limiting your tax payments at the end of the financial year.
Keeping proper financial records can also help you on a more personal level. Self-employed people can sometimes find it hard to convince a bank to lend you money or give you a mortgage. By having company accounts to show them, you stand a much better chance of getting them on your side; in fact, some lenders insist on seeing 3 years worth of company accounts before they'll consider you for a loan or mortgage.
Without having company accounts available to you, it can also be difficult to judge your liabilities and budget effectively; for example, if you don't know where you stand financially, how do you know when you've become liable for VAT registration? When everything is considered, you can see that having an accountant and keeping on top of your finances can be a real boon for your business - and if you don't, it could cost you in many ways.