Thanks Paul i'll try that. Sorry for being so argumentative. Ian, yes that looks impressive.
Ewan i know that you mentioned you used to work in accounts , paul said something similar, but running a small business that involves cash is a little different.The reason for this is that cash can be fiddled.
When we, or our accountants fill in our tax return it is basically a profit and loss account. We could write anything we like, who's to know?
Well with the march of computers the tax man is doing less and less clerical type work because computers can handle all this and more and more tax inspector investigating. This is a very profitable strategy as most people who get looked at end up having to stump up, very often they go back seven years, so even a couple of thou a year soon adds up. If you give them any lip, or play the barrack room lawyer you get penaltys added on.
One of these investigations can turn your life upside down for anything up to eighteen months and is very stressfull. Some people emerge very bitter because they though that having an accountant or belonging to a certain fed gave them imunity.
Your chances of having one of these are that if you are in biz for say fifteen years, you will probably get one. If your book keeping is poor but you have a modest lifestyle you will still probably be okay.If you've got a wife who's on a good wage, similarly, that can explain a lot.
Otherwise your best chance of survival is to keep good books. The law says that they shoud be 'clear and easy to follow'. For small and simple businesses like ours we should be able to produce a profit and loss account at the end of the year, and keep a daily/weekly summary of cash resulting in a cash in hand figure that is carried forward to the following week.
For example, if you suddenly pay £500 cash into the bank, where did it come from? So long as it is recorded against the cash in hand, then this and things like it are fine.
You are quite right, you don't need to do these things, but if you are successful and don't want to have it all taken away from you ten years from now because you didn't know what a weekly cash in hand figure was.
More complex businesses do look at cash flow and include what is in the bank and do reconcilliations etc.
Anyway, both of the programmes seem to be having a stab at providing us with a figure so thanks again to both Paul and Ian.