An accounts or accounting department, sometimes referred to as the finance department provides accounting services and financial support to specific businesses. It can be internal or external and is responsible for accounts payable and receivable, inventory, managing payroll, data input, credit control and in fact all financial aspects of your business. It’s impossible for a large business to operate efficiently and more importantly profitably without one being in place. When you set up in business, you may find that initially you do not require a whole department, but all of the elements that an accounts department handles could be applicable in a smaller way. Our latest article looks at the definition of an accounts department, what it deals with and why using Team 4 Solutions could be the perfect answer for small business accounting and bookkeeping.
Accounting department definition
Part of a company’s administration that is responsible for preparing the financial statements, maintaining the general ledger, paying bills, billing customers, payroll, cost accounting, financial analysis, and more. The head of the accounting department often has the title of controller.
Accounting and Bookkeeping – the section of a company that deals with the accounts.
The department in a company or organisation that prepares its financial information.
What does an accounts department deal with?
- Accounts Payable and Accounts Receivable
- Payroll – to include bonuses, benefits, sick leave and time off
- Credit Control – to include cash flow and use of accounting software
- Reporting and Financial Statements
- Taxation and VAT
Accounts Payable and Accounts Receivable
Accounts Payable (AP) are payments to outside partners for goods or services whereas Accounts receivable track monies coming into your business for goods and services from clients and customers. This is key to calculate the profit or loss your company is making and should trigger opportunities to improve on the situation. It is often referred to as ‘balancing the books’.
This will ensure your employees are paid accurately and on time. It will include commissions, bonuses and benefits that are due to them. Another key function is recording employees’ time off from work, holidays and sick pay. Our recent article about using a payroll specialist will give a lot more information on this topic.
Monies coming in are essential for a healthy cash flow, but getting your customers and clients to pay on time is a challenge. Nobody really likes asking for money so you need an accounts department that will set up a smooth credit control process and chase those outstanding invoices. Systematic records must be kept of your company’s financial transactions and here accounting software is used which could include QuickBooks, Xero, Sage or other customised systems.
Reporting and Financial Statements
Financial information is collected in order to prepare accurate financial statements and reports. This allows companies to make more informed business decisions, forecasts and prepare budgets. It also determines profit and loss. Your accounts department will prepare end of year financial statements and reports to include balance sheet, income statement and cash flow.
Taxation and VAT
If you have a large company, you will need a taxation department. All decisions made by your business will have tax implications which will need to be identified and incorporated into financial planning and decision-making processes. Funds need to be available to pay HMRC at the right time. Evasion of tax is illegal and there are tough penalties so you will need your tax department to make sure laws are complied with. Legal compliance is key so that your business stays compliant with relevant financial laws. You’ll also need to register your business with HMRC is your VAT taxable turnover is more than £85,000. You will be responsible for charging the right amount of VAT, paying VAT due to HMRC, submitting returns and keeping VAT records and a VAT account.
Your business will have various running costs and some of these can be deducted from your taxable profit as long as they are allowable expenses. These include office, travel and clothing expenses, costs of business premises and advertising, marketing and training courses. However, this is a complicated issue and next month, our blog will be all about this topic and will include capital allowances which is when you buy something you keep to use in your business such as equipment, machinery or business vehicles.
How can Team 4 Solutions help you with your accounting?
Keeping up with your business accounts and bookkeeping on a daily basis is time consuming and challenging. However, by doing this, it will ensure total transparency in all financial transactions. For smaller businesses, it would not be feasible to have a department and it may not warrant a full time member of staff. That’s where outsourcing your accounts can be invaluable and cost effective. You may just need someone to work on your accounts for a half day a week or longer and using the outsourced option of Team 4 Solutions will allow you to have that flexibility. We are here to set up the accounting systems to meet your unique requirements and provide a support service for your small business acting as your data importer and credit controller. We’ll also work seamlessly with your accountants. For more information, contact us on +44(0)1825 763378 or email firstname.lastname@example.org