Every business has to submit an income tax return to the Tax Authorities each year. Therefore, the proprietor will need to prepare accounts in order to identify the taxable profit of the business.
This will often be the prime reason for the preparation of accounts, but there are a number of other reasons why this task is undertaken.
The example of a business plan/finance application in Chapter 12 includes samples of accounts for reference purposes.
Apart from the need to prepare accounts for tax purposes, the other reasons for preparing accounts are as follows.
■ The need to prepare a profit and loss account to identify whether a profit or loss is being made, and to establish if the business ...