When people talk about accounts they often mean one of two things:
- The financial reports prepared by an accountant, or
- The day to day financial records of a business.
The financial reports contain profit and loss and balance sheet figures and are the figures that are used to calculate the likes of tax liability and dividend entitlement. These can be Sole Trader or Partnership Accounts which are entered into the Self Employed section of the Self Assessment or Partnership returns, or Company Accounts which are submitted to Companies House and are available to view on the Companies House website, normally in an abbreviated form.
The individual transactions that form the basis for the accounts are recorded on the ledgers and journals of the business often referred to as ‘the books’. Traditionally these are maintained by a bookkeeper but with most small business’ this is done by the business owners themselves. However, this traditional method of record keeping is being phased out under the Government’s Make Tax Digital initiative.