can I prepare profit and loss accounts?

pEvery business has to prepare and report their financial results. Dependent upon the financial size of yournbsp; company, will specify what format your financial reporting (accounts) will involve. Profits of any limited company, LLP or plc have to be submitted to Companies House. It is not only the profit level of the business that determines the format and status of the accounts or financial papers produced.nbsp; Your business will have a turnover figure which is not the same to the profit figure and the level of the turnover will determine whether your financial statements (accounts) must be audited. If your business is a partnership or you are a sole-trader, then you do not have to report and register your accounts to Companies House.nbsp;nbsp; Companies House is the agency that monitors and registers companies under todays regulations and Governments. H M Revenue amp; Customs do expect that partnerships and sole traders do report and follow their legislation and therefore you need to disclose\declare your profit or loss to them, the same as limited companies, plcs and LLPs have to. To declare your profit and loss to the Revenue, as well as the preparation of their statutory returns, it can be advisable to create simple accounts with a profit and loss account. This can then be sent along with your tax return to confirm any entries on your tax return. You possibly could also find that if you apply for any type of finance to a bank or finance business, they could require for your last three years accounts and in particular will want to look at a profit and loss account. Do you know what a profit and loss account is and what is required to create one?br /br /If you are out shopping at any time and you use your business account for any purchase( a title=womens perfume href=http://www.womensaccessoriesshop.com/women%27s-perfume.html target=_blankwomens perfume/a, or anything else) then these must not be included the business accounts and should not be part of business expenses.br /br /By summarising your financial transactions into helpful fundamental categories, this will create a profit and loss account for a certain time period which at the end of the summary will disclose if your company has made a profit or loss. You can set up your own profit and loss account. To start with you will want to basically divide it into two sections with the top section being your money in and the bottom section showing your money out.br /br /To understand the income figure and how it is derived from, it is then separated into sub categories.nbsp;nbsp; One category shows your turnover figure and the other category indicates any other income received. Turnover or business sales is the total amount of your product sales or services in your financial year or period. You need to record your data cautiously in order that you possibly could extract all this data together.nbsp;nbsp; You could use handwritten accounting books ornbsp; simple spreadsheet on a computer or purchase a computer software program which specialises in this.br /br /As well as the business key revenue, it may also receive income from any property which it owns, sale of any assets including equipment, any additional money or bank loans and bank interest and this is all classed as other income. When reporting your outlay for your profit and loss account, it generally splits into three key categories, one being cost of sales, business expenses and cost of equipment. Cost of sales are the expenditure that are incurred in obtaining or creating your product or service. General company expenses which are required for your company to run including insurance, rent and rates, administrative expenses such as stationery will all be collated under the heading of business expenses. Any outlay in connection to any equipment your business has or uses is classified under cost of equipment.nbsp; This might include cars and any equipment which is leased or bought on hire purchase.br /br /It is necessary that all your ledgers are supported by receipts and that any of your personal, non business related receipts are kept separate especially in a title=womens handbags href=http://www.womensaccessoriesshop.com/women%27s-handbags.html target=_blankwomens handbags/a and not included with your company receipts.br /br /When choosing your accounting period, being a self employed or a partnership, it is better if you make your accounts on an annual basis with the year ending either on 31 March or 5 April. If you require your accounts info to end and be available for the preparation of your tax return, by choosing a year end date of 31 March or 5 April will mean that your accounts and tax return info are the same and you are not required to cross reference to different years financial statements to get the right information for your tax return. You can vary your year end so that it ends on a date like 31 March by having a set of accounts for another time period, possibly a shorter time. This means for instance that you begin your first accounting period from the beginning to either 31 March or 5 April, which could not be a whole year and might be a number of months. From then on you will produce annual accounts to the year end you specify.br /br /To support your accounting information, you must maintain all your receipts and records backing up how these figures were prepared. As a company you should make sure that you retain all your paperwork to support your entries in your accounts fornbsp; the legal amount of time which is a minimum of six years.br /br /Hopefully you will now have knowledge of what a profit and loss account is, what figures are used, what it shows and what they are used for.. br /br //p