Getting your accounts right is crucial to managing your pharmacy business accounts effectively. From meeting your statutory reporting obligations to planning for the future, here’s what you need to know.
Running a pharmacy brings certain obligations in terms of accounts. You’ll need to submit accounts to Companies House within nine months of the end of the financial year. You will also need to pay any corporation tax to HMRC during this period. The advice and help of professional accountants will help with this.
Ideally, you will set up a bookkeeping system from the start of your career as a pharmacist. You can do this internally or go to a bookkeeper for assistance. An accountant can advise with this and prepare and submit your accounts on your behalf.
In terms of future planning, a lot depends on your business and personal circumstances. It’s always worth creating a tax plan or considering future inheritance tax for the future. An accountant will be able to advise you on how to minimise inheritance tax for your loved ones throughout your working life.
An accountant will also be able to advise you on your responsibilities with regards to PAYE/ National Insurance and VAT. If you employ others, you are now also responsible for their workplace pensions, with the admin.
Cash flow can be challenging for new pharmacies unless you are fortunate enough to have the capital to spare. It’s essential to try and forecast this as much as possible, especially as getting credit in the early stages can be challenging.
Try to review your costs regularly and actively look for ways to reduce costs. An experienced accountant can assist with this. The aim should be to plan six months to ensure your cash commitments align with sales.
You should also consider a “safe balance”, meaning the amount of cash to be retained in the company at any one time, to meet commitments in case of difficulties.
Ultimately being a pharmacist is a business like any other, and you must keep on top of the financial side of the role. You should monitor your NHS income monthly to track whether it is expanding or contracting.
You could also try looking at the sales to payroll ratio and your gross profit %. Many pharmacists set an annual target for return on their assets to see if all their assets (premises, IT, furniture) are supporting sales. Most importantly, you should always be aware of your pharmacy’s performance.
This is especially useful if you are hoping to borrow from lenders. They will expect your pharmacy to fulfil various criteria, and it’s best to prepare for this from the off.
This might all sound a little overwhelming! But that’s why we’re happy to help.
Get in touch with us, and we’ll be delighted to discuss what expertise we can bring to managing your pharmacy accounts.
Professional assistance can free you up to manage your pharmacy how you choose, safe in the knowledge the experts are looking at the numbers side.