- Location
- Cumbria
Company accounts are a year in arrears, not current and buying a new tractor does not kill profit, it is a means of taking advantage of it's allowances, and is based on good business management, not impulsive buying. Stock/asset valuation has nothing to do with operational profit. Always remember there is vanity and sanity. Vanity is high asset values and high turnover. Sanity is profit..........But just how do you calculate "profit" on a farm?
Does the business owner take a wage? This could be anything between £15k-£50k
Business might not make a trading profit, but if stock valuation rises by £100/head that could be a £50k paper profit
What if the business buys a new tractor just before the end of the year to reduce an expected tax bill.
What about the business owner's return on investment?
There are numerous ways a profitable business can manipulate a profit figure up or down by £100k
Profit is profit, simple as that, no profit, no profit sharing, lot's of profit, lot's of profit sharing.
Of course it is expected the owners take an income, however that is before the nett profit, not after, but, as they also have the advantage of paying themselves a dividend, then it is unreasonable to also take from the workers profit sharing pot.
Accountants can be creative when trying to hide profits, however the tax/vat man is not stupid and see's so many accounts, anyone who is being over-creative is very quickly picked out and the dreaded inspection begins.
The last thing anyone wants.
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