What’s the difference?
Choosing an accountant is an important business decision to make. Surrounding yourself with a good team involves picking people that you trust to work with you and help you to achieve the goals that you want from your business. Understanding the type of accountant that you need is an element of the decision. Generally, there are two types of accountants: financial accountants and management accountants. So, what’s the difference?
Financial accountants produce quarterly and annual statements showing what has been happening in your business. These reports are viewed by external personnel such as shareholders, and the tax office. They tend to be highly condensed and limited to double entry bookkeeping transactions. These are the reports you will receive at the year-end showing your final figures, including your profit and loss.
Management accountants produce reporting as frequently as is needed, this could be monthly or even weekly if necessary. The reports are viewed internally and are used by managers and decision makers to ensure that they understand what is happening in the business. The reports contain the information that they need, and are not limited to conventional double entry bookkeeping, but can be adapted for your needs.
One of the services management accounts can provide is the generation of budgets and forecasts, giving you not just targets to aim at but also, by comparing actual results with predicted ones, you can be forewarned when things are going off track so that you can take corrective action before it’s too late.
Financial accounts can be audited by external auditors, whereas management accounts are not subject to external review. A management accountant will generally also be able to produce your year end reports as required in order to file your tax return, but they will have also worked with you throughout the year to ensure that your business is running correctly. A financial accountant will ensure that you fulfil your legal requirements but won’t necessarily help you throughout the year and will be less involved in the on-going development of your firm.
At TLA Business Services we believe that using a management accountant will benefit you immensely. Working with businesses throughout the year, we are able to pick up and respond to problems before they escalate. We think you want to know if you have a problem, as it arises not just at the end of the year. Some businesses don’t need a management accountant, they simply need someone to file their tax return, but if your business does need a management accountant, make sure your accountant can do this. At TLA Business Services we enjoy building good working relationships with our clients and helping them to grow their businesses. If you are interested why not arrange a meeting call us now on 01905 21411