Ethical/ Philosophical Query - Financial Statements For Unincorporated Businesses
bluesky106
Registered Posts: 3
Hi
I am seeking thoughts and opinions on whether it is correct or appropriate to recommend that unincorporated businesses should have financial statements prepared?
As a newly licenced AAT member sourcing potential clients to build a small accountancy practice, I find myself running into a wall and I am curious to know whether other members are experiencing similar scenarios.
My experience to date of attempting to source clients in owners of unincorporated businesses is that the general concensus seems to be that only self assesment tax returns are required, with no expectation/ need to have financial statements prepared.
The most recent conversation I had with a potential client of an unincorporated business was that the business was established on an unincorporated basis, as a sole trader on the recommendation of friends and family as there was no legal requirement to prepare financial statements.
The owner had also been recommended (by friends and family) that bookkeeping wasn't neccessary. The owners current practice is to raise a sales invoice using a word processor and to store receipts and invoices for purchases and expenses during the year in a folder, with no means of recording or processing transactions other than storing (the business is below the vat threshold).
On reflection after the conversation I couldn't help feel a little fraudulent recommending and promoting services for adequate and proper bookkeeping, along with the preparation of financial statements prior to preparing tax returns.
My main query is surrounding the preparing of financial statements - yes there is no legal requirement to prepare and file as with limited companies, however I am wrong/ unethical to still recommend that financial statements be prepared even for unincorporated businesses? Or am I trying to sell potential clients a "golden goose" a service that isn't required at an undue expense?
I would be grateful for the thoughts of others on this, particulary @AAT_Team for guidance.
Thank you.
I am seeking thoughts and opinions on whether it is correct or appropriate to recommend that unincorporated businesses should have financial statements prepared?
As a newly licenced AAT member sourcing potential clients to build a small accountancy practice, I find myself running into a wall and I am curious to know whether other members are experiencing similar scenarios.
My experience to date of attempting to source clients in owners of unincorporated businesses is that the general concensus seems to be that only self assesment tax returns are required, with no expectation/ need to have financial statements prepared.
The most recent conversation I had with a potential client of an unincorporated business was that the business was established on an unincorporated basis, as a sole trader on the recommendation of friends and family as there was no legal requirement to prepare financial statements.
The owner had also been recommended (by friends and family) that bookkeeping wasn't neccessary. The owners current practice is to raise a sales invoice using a word processor and to store receipts and invoices for purchases and expenses during the year in a folder, with no means of recording or processing transactions other than storing (the business is below the vat threshold).
On reflection after the conversation I couldn't help feel a little fraudulent recommending and promoting services for adequate and proper bookkeeping, along with the preparation of financial statements prior to preparing tax returns.
My main query is surrounding the preparing of financial statements - yes there is no legal requirement to prepare and file as with limited companies, however I am wrong/ unethical to still recommend that financial statements be prepared even for unincorporated businesses? Or am I trying to sell potential clients a "golden goose" a service that isn't required at an undue expense?
I would be grateful for the thoughts of others on this, particulary @AAT_Team for guidance.
Thank you.
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