What does my accounting report sound like to you?

[7specialgems]

I have put together a bit of a homebrew report which tells me, at the end of a period, how much distributable profit is left in my company account.

For a period (usually monthly) I start out with the total of cash at bank/published invoices. I then subtract the period's expenses, the VAT, and Corporation Tax. I then go one further and subtract the full amount of a 12 month budget that would pay my salary and all the company's expenses for the period if I was benched.

The number that falls out of the bottom is pure profit, ripe for dividends.

I tend to cream off the suplus above a certain figure as my dividend a couple of times per year.

I tried to describe this report to a contractor friend of mine on my current gig and how I found it useful, and he looked at me as if I come from Mars.

It's got me thinking that I've dreampt up something possibly overcomplicated for a problem that every contractor has.

Can any Account types on here recognise what I'm trying to do and chime in with a snappy googlable term that describes a common format for it?

[Clare@InTouch]

Are you trying to create a cashflow forecast?

[GazCol]

I have put together a bit of a homebrew report which tells me, at the end of a period, how much distributable profit is left in my company account.

I start out with the cash balance and subtract expenses, VAT, Corporation Tax and the full amount of a 12 month budget that would pay my salary and all the company's expenses for the period.

The number that falls out of the bottom is pure profit.

I tend to cream off the suplus above a certain figure as dividends from this figure.

I tried to describe this report to a contractor friend of mine on my current gig and how I found it useful, and he looked at me as if I come from Mars.

It's got me thinking that I've dreampt up something possibly overcomplicated for a problem that every contractor has.

Can any Account types on here recognise what I'm trying to do and chime in with a snappy googlable term that describes a common format for it?

A balance sheet?

[7specialgems]

A balance sheet?

I wasn't sure if Balance Sheet was appropriate because I'm including estimated, future values and I am not including non-cash assets.

[7specialgems]

Are you trying to create a cashflow forecast?

I'm not sure it is a cashflow forecast because the only period I am looking at is up to and including the present day?

I'm subtracting my 12 month bench warchest from Net Profit to work out what's really available to me to pay in Dividends.

It has a similar layout to a Balance Sheet but it doesn't contain non-cash assets and it contains the 12 month bench fund as a liability.

[Martin at NixonWilliams]

I have put together a bit of a homebrew report which tells me, at the end of a period, how much distributable profit is left in my company account.

If this is what you are aming to calculate you should not be starting with the cash at bank - the company's cash position is an entirely separate matter to its profit position.

The calculation of the distributable profit is as simple as:

Turnover
- Expenses
= Profit before tax
- Corporation tax
= Profit available for dividends

[7specialgems]

If this is what you are aming to calculate you should not be starting with the cash at bank - the company's cash position is an entirely separate matter to its profit position.

The calculation of the distributable profit is as simple as:

Turnover
- Expenses
= Profit before tax
- Corporation tax
= Profit available for dividends

I meant to say Turnover. I'm including sales on an accrual basis

The structure I have at the moment is:

Cash at bank + unpaid raised invoices
- Expenses for this period (salary, company expenses, consultant expenses)
- Corporation Tax totted up to date and unpaid (includes amount attached by unpaid raised invoices)
- VAT totted up to date and unpaid (includes amount attached by unpaid raised invoices)
- 12 month company survival fund
= Profit available for dividends

I think my problem is that my report is with respect to the company bank account after all expenses are paid - and to date, whereas P&L is with respect to sales for a period.

[tarbera]

wow

I have put together a bit of a homebrew report which tells me, at the end of a period, how much distributable profit is left in my company account.

For a period (usually monthly) I start out with the total of cash at bank/published invoices. I then subtract the period's expenses, the VAT, and Corporation Tax. I then go one further and subtract the full amount of a 12 month budget that would pay my salary and all the company's expenses for the period if I was benched.

The number that falls out of the bottom is pure profit, ripe for dividends.

I tend to cream off the suplus above a certain figure as my dividend a couple of times per year.

I tried to describe this report to a contractor friend of mine on my current gig and how I found it useful, and he looked at me as if I come from Mars.

It's got me thinking that I've dreampt up something possibly overcomplicated for a problem that every contractor has.

Can any Account types on here recognise what I'm trying to do and chime in with a snappy googlable term that describes a common format for it?

Freeagent will be quaking in there boots

[Martin at NixonWilliams]

I meant to say Turnover. I'm including sales on an accrual basis

The structure I have at the moment is:

Cash at bank + unpaid raised invoices
- Expenses for this period (salary, company expenses, consultant expenses)
- Corporation Tax totted up to date and unpaid (includes amount attached by unpaid raised invoices)
- VAT totted up to date and unpaid (includes amount attached by unpaid raised invoices)
- 12 month company survival fund
= Profit available for dividends

In theory it should work but it is difficult to manage and is much more than what you must demonstrate in order to be able to declare a dividend. You are effectively extracting the profit and loss figure from a balance sheet in order to determine the profit available, which is more work than preparing the profit and loss itself to do the same thing, if that makes sense.

My advice would be to calculate the turnover, expenses and CT liability each period. If done correctly, and once the invoice is paid, then what is left in the account should be roughly the profit you have calculated plus any VAT, PAYE, CT etc. - At the yearend everything should tie up nicely.

Note that the above does not include other debtors/creditors you might have, cash tied up in assets, share capital etc.

I recall you saying in an earlier post that you were not completely satisfied with your accountant but this is really something that should really be provided for you.

I hope this helps.

Martin

[7specialgems]

In theory it should work but it is difficult to manage and is much more than what you must demonstrate in order to be able to declare a dividend.

I think some of the motivations for the complicated route include payment of VAT quarterly and that some dividend payments have already been made.

If I do a P&L of the year to date, then it is difficult to compare the number that falls out of the bottom to what's in the bank because some of the liabilities and the profits have already been settled.

As complicated as I have made it sound, I thought it made sense to just derive it all each time from first principles from the current revenue position.

It sounds like there isn't a recognised FRS type of format for this sort of report.