How UK Accounting Practices Can Simplify the Preparation of Income and Expenditure Account

Have you faced any difficulty in preparing income and expenditure accounts for your client? I am sure you must be facing such a situation. Accounting practices catering to UK-based clients have countless important accounting and compliance responsibilities. Among these responsibilities is the preparation of income and expenditure account. Prepared by entities that are non-trading in nature, the income and expenditure account is prepared at the end of the accounting period to match the revenue with expenses and determine surplus or deficit.

Ideally, this work is done by accounting practices like yours because you have the necessary resources and tools in the form of an in-house accounting team. However, you may have noticed that the preparation of income and expenditure accounts is becoming increasingly complex, even for practices with dedicated accounting teams. The reasons are many, from high levels of complex regulations to increased workloads from your clients (business and non-business ones). These reasons have led to a situation where your in-house teams are having less time to dedicate to income and expenditure account preparation.

To ease this situation, we have devised some ways that will help your in-house team better manage the preparation of Income and Expenditure Accounts. There is also a one-stop solution to make the preparation of income and expenditure account easy, but more on that later.

Features of Income and Expenditure Account in UK

Some of the essential features of income and expenditure accounts are as follows:

• Non-trading firms are required to prepare an income and expenditure account, which is similar to the profit and loss account made by the trading firms.
• It is usually prepared at the end of the period
• It is prepared on the accrual basis of accounting
• It records non-cash items as well
• Only items of a revenue nature are included, and capital items are excluded
• The surplus or deficit balance at the end of it is then transferred to the capital fund account
• It doesn’t start with an opening balance
• It is based on the double-entry system of accounting

Difference between Income and Expenditure Account and Profit and Loss Account

Your accounting teams must have faced a situation where they might get a little confused with income and expenditure account and profit and loss account because of the names, but they are not the same. The income and expenditure accounts are for non-profits, using accrual to record revenue expenses. On the other hand, the profit and loss account are for organisations and businesses that earn profits. Through this account, a business or an organisation will be able to establish net loss or net profit of an organisation. Check out our blogs to get a deeper understanding of income and expenditure account and profit and loss account.

Steps to Simplify the Preparation of Income and Expenditure Account

We can come to an agreement that preparation of income and expenditure account in the United Kingdom is highly complex and requires specialised skill sets to manage. It is safe to say that the income and expenditure account preparation has to be made simpler if it has to managed without much stress.

Well, your in-house accounting team can breathe a sigh of relief because we have devised a few steps that will make preparing income and expenditures a breeze. Let’s find out how we are going to achieve this.

Using the Best Accounting Software

Gone are the days when accounting was done manually, which was not only inefficient but also prone to human errors. Even if you had managed it with your brilliant in-house accounting team, it would have been a highly inefficient process. Thankfully, these days, accounting software such as Xero, QuickBooks, and Sage are available and highly used by your competitors, and it has significantly reduced their workload.

These tools will automate the tracking of income and expenses, reduce error, and provide real-time financial data, which will enable you to prepare accurate financial reports for your clients. By incorporating the best accounting software in your accounting process, you can maximise your efficiency and capability to offer the best services to your clients.

Standardisation of Financial Records

Your accounting practice must also focus on standardising income and expense recording. By recording receipts, invoices, and payments consistently, you ensure data accessibility while preparing the accounts. This also makes the auditing process easy and fast. Standardising financial records promotes transparency, earning client appreciation and adding brand value to your practice.

Outsourcing of Accounting Function

UK accounting practices today handle the accounting responsibilities of multiple clients, which overloads accounting teams and reduces their efficiency. Also, it leads to less time for essential accounting responsibilities such as preparing income and expenditure account. Identifying this problem, professional outsourced accounting service providers like Corient UK have started offering specialised outsourced year end services for preparing income and expenditure account. We handle the entire process, from documentation to final reporting, while ensuring full compliance with UK accounting standards.

Bookkeeping and Reconciliation on a Regular Basis

Regular bookkeeping and reconciliation of bank statements require a significant workforce, leading to no other option but to expand your workforce, which will burden your budget. Regular bookkeeping ensures income and expenses are recorded as they occur, preventing backlogs. You must reconcile bank statements monthly or quarterly to identify discrepancies that could cause future problems.

We understand that performing this step is a talk ask from you, especially when there are budget constraints for team expansion. To mitigate this challenge, you can ask your outsourced service provider to do this task on your behalf. Your service provider ensures automation and maintains compliance while keeping your budget intact.

Prepare Reports on a Template

You must start providing income and expenditure reports on a template for your clients. Choose a template that will show the data in a well-structured format, making it easier for your clients to understand. By preparing the report on a template you are reducing the time taken in report preparation and formatting.

Automation and Integration

Your practice must take advantage of the latest technologies that will simplify your income and expenditure account preparation, such as focussing on automation and integration. By integrating multiple systems such as payroll, CRM, and accounting software you can simplify the data collection process. Furthermore, by automating report-making through integrated systems, you will be able to compile income and expenditure data quickly, thus reducing manual labour and human errors.

Frequent Training and Support

Ensure that your accountants get adequate and relevant training and support to stay in synch with the latest accounting standards and HMRC regulations. Regular training will help your accounting staff guide clients and help them understand the process requirements. This way, you ensure accuracy in records from the start, making the year end process much easier.

Conclusion

An income and expenditure account report is important for your clients because it details their income and expenses, helping them take necessary actions. Implementing the above steps judiciously will streamline the time-consuming process. Implementing these steps promotes professionalism, accuracy, transparency, and speed, boosting client appreciation and your reputation.

We agree with you that implementing all the above-listed steps by yourself is not an easy task. By choosing to implement outsourcing, you will automatically trigger the implementation of other steps. Most UK accounting practices have adopted this route and benefited immensely. Currently, multiple service providers are offering their services and among them is a rising star, the ambitious Corient UK.

We are an outsourced accounting provider in Coventry, UK, offering services with a blend of human expertise and technology. We have handled income and expenditure account preparations for multiple clients under our outsourced year end services. Furthermore, we offer other accounting services, such as bookkeeping, payroll, management accounts, and VAT. Our services have improved quality and capacity for many practices, and we can do the same for you. State your requirements and doubts on our website contact form, and our executive will contact you as soon as possible.

Looking forward to a fruitful and long-term partnership.