| Management Account: | | 1. To document every financial transaction into the private company diary that is shared by all employees. | | 2. To keep a digital record of everything that is bought and everything that is sold in a diary. | | 3. To be aware that anything entered into the diary shall exist forever, nothing can be deleted or hidden. | | 4. To be a Director of a private company grants that Director legal responsibility for the mandatory financial records of that private company and that legal responsibility cannot be contracted to an external accountant for a fee. |
| Company Management: | | 1. To be aware that two types of private company exist as (1) a company with active management in control or (2) a company that has outsourced financial control to others. | | 2. To accept that a large number of private companies eventually go bankcrupt because the Directors were not in control of their own companies fuinancial transactions. | | 3. To acknowledge that the Directors are highly motivated to run the business or trade and may have little interest or knowledge of their financial accounting obligations. | | 4. To grant each private company the right to choose what is the best type of financial control the Directors choose to deploy as (1) where the Directors take active control or (2) where financial control is outsourced to external people. |
| External Control: | | 1. To be able to identify the large number of private companies that outsource their financial obligations to external accountants by simply looking at the company registered address. | | 2. To expect that an external accontant will take financial control of a private company by registering the company address and bank accounts with the accountants address, rather than the true company address. | | 3. To expect the external accountant will run the payroll and pay the company employees from the company bank account - to question who is in control when the directors are treated as employees. | | 4. To expect sales invoices to be paid into the company bank account so the external accountant can control cash flow, asset valuations and total financial control of the private company. | | 5. To suggest that the directors may have no control over the actual external fees that accumulate during the year and that external accountants may be motivated to make things as complicated as possible to manimize their fees and make it far too difficult for another person to take over control of the private company. | | 6. To be sad that the first time the directors are told that their private company has run out of money is when the accountant cannot pay the payroll costs - far too late to take remedial action. | | 7. To be aware that Directors who are treated as employees may lose out on many types of HMRC allowances that are granted to big company Directors such as a generous expense policy. | | 8. To dare to say that the external accountant controls the private company and employs people working in the private company, regardless of the Directors who are not in control. |
| Management Control: | | 1. To guarantee the long-term viability of any private company, the Directors must take contol of their own financial transactions. | | 2. To grossly simplify whatever an external accountant has said and done, because management control means only two things as: | | (1). Revenue recording as income, turnover and sales-invoice payments - simply all money paid into the bank by a customer. | | (2). Expendature recording as salaried, expenses, overheads, insurance, parts and supplier payments - simply all money paid from bank account to a supplier. | | 3. To be comfortable that all Directors have a legal and moral responsibility to have a simple record of all revenue and all expendature each and every month. | | 4. To know that quarterly VAT returns are simply the addition of three monthly management report totals. | | 5. To know that annual company returns are simply the addition of twelve monthly management report totals. | | 6. To take financial control may begin with a generous expense policy where tax-free HMRC approved allowances are maximized. To let the company provide free meals, free mobile phone accounts, travel and accomodation allowance, free drinks, free uniform and personal protective equipment including laundry costs, working-at-home allowance, child-care allowance, etc.. | | 7. To take financial control may continue to pay Directors an annual income and dividend for being a Director, rather than being a monthly payrolled employee. | | 8. To continue with the private company making a contribution of say 6000 pounds per year to a personal private pension scheme where HMRC conributes a futher 1500 pounds per year, so the private saving fund grows by 7500 per year to say 100,000 pounds in ten-years. |
| Monthly Payroll: | | 1. To be able to classify a private company if it operates a monthly payroll for employees where the Directors are paid and treated as emplyees. | | 2. To expect a more progressive private company to have Directors off-payroll and paid to be controlling Directors with a tax efficient salary and dividends paid annually. | | 3. To expect a Director with a Directors Service Agreement to have no constratints on holidays, hours of working or any time limitations because as Directors they shall represent their private company 24*7 without limit. | | 4. To expect the Board of Director to have a very generous expense policy that fully complies with the ever changing HMRC tax-free allowance regulations, including free canteen meals and meals when travelling on business where a meal may include a bottle of wine or beer. | | 5. To understand that the only legal obligation and duty as a Director of a private company is to maintain complete and correct financial records. | | 6. To permit a Director to continue to do work as a trade is acceptable, but that is not their legal duty. | | 7. To those Directors who choose to outsource their legal obligation and duty to an external accountant, pray that will not be the worst and most expensive decision they ever made. | | 8. FACT: To be aware that virtually every big company has Directors off-payroll so those Directors can be treated as Directors with a generous expence policy and not treated payrolled employees. |
| MAM: | | 1. To let MAM mean "Management Account Monthly" as a simple read-only list of revenue and expendature with totals. | | 2. To let MAM represent the minimum legal obligation and duty of every Director, regardless of their job title. | | 3. To cause MAM to be 100% automatically generated without any manual transcription - to eliminate errors by not permitting manual changes. | | 4. To record each customer revenue transaction as the gross amount shown in the bank account as a credit from a named customer. To also record the VAT rate included. | | 5. To record each supplier payment transaction as the gross amount shown in the bank account as a debit to a named supplier. To also record the VAT rate included. | | 6. To undertake a bank reconsiliation at least once a month to ensure that every credit and debit trasnaction is accounted for. |
| Cash Flow: | | 1. To be very aware that the primary issue with every private company is cash flow that must be managed because even a profitable private company can fail to make it payroll due to cash flow not being controlled. | | 2. To cause each and every "job" be assigned a job number that shall eventually become the sales invoice number, and every sales invoice number shall eventually be a customer payment to the bank account. | | 3. To cause each and every "job" be assigned a job number that shall be used to record every supplier material and labour time to that job number so nothing can be spent without it being assigned to a job. | | 4. To record each customer job as a document and append to the document time and materials as those costs accumulate so the final customer sales invoice does not omit any time or material spent on that job. | | 5. To let each job document evolve into a sales invoice that is eventually paid by a customer so that document shows all the costs, the profit and the revenue earned from the customer. | | 6. To let each job document show cash flow for a job, all its costs and its profitability. To let Directors be able to be in control of their finacial future. | | 7. To record each supplier payment transaction as the gross amount of an expense, purchase, overhead, service, etc.. To deploy a "job" number as "100" to imply that the cost is an administrative overhead, rather than a customer job cost. To know that HMRC likes cost-of-sale costs be to identified separatly from administrative costs. | | 7. To record each employee payment as a transaction that is treated like any other expendature. To record drinks and expenses as a transaction like any other expendature. |
| Expense Policy: | | 1. To suggest that the primary purpose of a private company is for the financil benefit of its directors and no other purpose. | | 2. To suggest that a private company exists to maximise benefits to its Directors and employees with the exclusion of all external suppliers. | | 3. To suggest that a private company has a duty to its Directors and employees to provide the very best expense policy that is legally allowable. | | 4. To classify expenses in two ways as: | | (1). Benefit-in-Kind as a taxable expense such as a company owned asset used for private purposes. | | (2). Excluded Allowance as a tax-free expense such as free meals, drinks and sustainance. | | 5. To do whatever is necessary to minimise benefit-in-kind taxable expenses because that additional tax is taken directly from a employees income. | | 6. To do whatever is necessary to maximize tax-free allowable expenses because that means employees do not need to spend their own income. | | 7. To fully comply with UK regulations so each and every excluded tax-free allowance is available to people to whatever the private company can afford. | | 8. FACT: To be aware that virtually every big company has Directors dining room with reasonable meals served with wine or beer. To be able to claim allowable expenses for breakfast at cost or as an allowance when travelling on business before 08:00. To be able to claim allowable expenses for lunch at cost or as an allowance when travelling on business between 12:00 and 14:00. To be able to claim allowable expenses for dinner at cost or as an allowance when travelling on business after 18:00. To let the company provide free meals to all employees and visitors when working in the office. To let the company provide free refreshments to all employees and visitors when at a meeting in the office. | | 9. To suggest that every Director has a responsibility to read the HMRC web site to fully understand and claim all tax-free excluded expenses. | | 10. To suggest that every Director has a responsibility and duty to be continually educated with applicable training provided by the company, including all expenses to attend those training seminars and conferences. To let the company provide Directors with free education, business class travel and good accomodation to any destination where relevant education, seminars, conferences and trade networking is provided. |
| Benefits Policy: | | 1. To suggest that to be a payrolled employee is like being a modern slave where taxes are deducted before any income is paid for the exclusive benefit of HMRC. | | 2. To suggest that a Directors annual salary should be 12,500 pounds per year as below the income tax threshold so income tax at 20% is not payable. To pay a Director 1000 per month does not need the extra expense of a payroll. | | 3. To suggest that a Directors annual dividend should be paid where the first 2,000 pounds is tax free and the remainder is taxed at only 7.5%. To be aware that three-time less dividend tax is payable ten-months after the HMRC year end of April - tax is not paid every month, but in January as 21 to 10 months later. | | 4. To suggest that a Directors annual private pension paid exclusively by the company should be between 6,000 and 12,000 per year with an extra 25% added to the fund by HMRC each year - like negative income tax. To expect a private pension saving fund of 7,500 per year may grow to 100,000 in ten-years, while a private fund of 15,000 may grow to 200,000 in ten years. To expect each Director to end up with a personal private pension savings scheme of 100,000 to 200,000 pounds every 10 years. To be a director with 40 years service could have a personal private savings fund of 800,000 pounds where the first 25% may be withdrawn tax-free and then 12,000 pounds may be withdrawn tax-free each year within the income tax threshold or larger amounts may be withdrawn each year with income tax payable at 20%. | | 5. To suggest that each Director needs an annual assessment with fellow Directors (and specialized consultants) to determine their strategic direction, ambitions and goals for the following year. To let the annual assessment include travel and accomodation to first class locations where deep thinking and relaxation is promoted and day-to-day business matters are kept well away. To let each Director publish their annual goals as a means to engineer a high degree committment with their collegues. | | 6. To suggest that each Director needs to be provided with two mobile phone accounts where one mobile phone number is published and used exclusively for business purposes while the second is used only for private purposes. | | 7. To suggest that each Director is granted to right to use their own private vehicle when travelling on business and that a tax-free allowance of 45 pence per mile is paid by the company for all business mileage. To expect a Director to be on-duty 24*7 and so may need to travel to see customers, suppliers and business associates for say 800 miles per month with a tax-free allowance of say 360 pounds per month where every trip must be verified as travelling on business. |
| Document Control. | | 1. Document Title: Management Account. | | 2. Description: Management Account. | | 3. Keywords: Management Account. | | 4. Privacy: Shared with approved people for the benefit of humanity. | | 5. Edition: 1.1. | | 6. Issued: 1 Jan 2022. |
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