It's an accounts question....why would a company have 70k in 'taxation and social security costs'?

[rosyandjap]

But only 40k in creditors.

What would the 70k In taxation and social security costs comprise of?

This is a company I am being interviewed for and I'd like to know what kind of a company it is.. thank you!

The 70k is due within 1 year, so I can't work out what it means..

Tax line comprises things like corporate tax, deferred tax, national insurance.

Creditors could be lower if they settle accounts quickly, or don't have many suppliers e.g. if offering services.

The balance sheet has a bottom line of -45k so it seems crazy to have such large taxation/social security costs.

Corporation tax, PAYE & NIC liabilities, VAT.

The -£45k bottom line is more worrying.

Creditors would usually consist of trade creditors and other creditors. As others have said tax owed sits separately and could be deferred tax or corporation tax which is charged at Year End and therefore is owed in the following year as a current liability. If the net worth is negative, how has it changed from the previous year? If say it was negative £100k but now only £45k this may suggest profit has been retained, albeit still a weak capital structure.

As others have said tax creditor is a separate line to other creditors

the level of tax and the -45k would need context - number of employees, reserves history, company hit by covid etc

This is VAT and paye and NIC. Do they have a big work force? Look at the note on employment costs and you could prob work out roughly the monthly paye and nic.

The previous years balance sheet showed a bottom figure of -35k so it's got worse.

They have 8 employees.

The taxation figure was £55k in the previous year so has increased by £15k.

P&L was -35k in previous year and -45k in current year.

My thinking is this company isn't looking great!!

Also they still haven't submitted 2023 accounts..

The revenue figure for taxation purposes is not the same as the operating profit reported in the accounts. Different accounting rules apply. The OP could be low because there was a large write off that year or due to amortisation of capital costs for example over a number of years.

What does their cash flow look like? And when are their long term debts falling due?

The increasing -reserves implies loss making rather than dividends of previous profit (as they shouldn't be declaring dividends without +reserves).

The tax figure (corporation tax, PAYE & NIC, VAT) could have increased because they have increased their workforce, so have higher PAYE costs, have increased their turnover towards the end of the year (so have increase VAT in the final quarter) OR aren't paying all their liabilities on time so are increasing the various taxes they owe.

I've known companies owing several years of corporation tax.

i’m not sure you should be analysing the accounts piece meal like this. You need to look at the whole picture and understand accounting

as pp said the tax would include vat so also depends on the business

What was their revenue? It sounds like a young company tbh

Also the filing deadline for the accounts was end of September and companies house can take a few days to upload so that’s not necessarily worrying if they have a 31 dec year end

Most all accounts are filed online nowadays and it is almost instant in showing. The accounts might take a few days to be available to download, but they should be showing as filed.

Their year end was 31st March 2023.

I think they may have a few more employees now too judging by the website etc.

They've had a compulsory strike off withdrawn too?

Has it only started trading fairly recently?

it’s difficult to tell without seeing the lot but sounds like they are a bit disorganised. Is there a tax note?

also depends on the industry etc etc but perhaps go to the interview and see how they come across and ask them!!

Accounts were due to be filed by 31 December 2023 if March year end so are very overdue

What was their cash balance? That will give an indication if they can service their creditors.

Cash 12k

Creditors falling due within 1 year £73k

There's no P&L account to see turnover etc.

Small companies can file abridged accounts at companies house, these don’t need to include a p&l

I think I will ask in the interview but I don't want to seem nosey as it's just a part-time admin job but I have a feeling the owner isn't the nicest guy and seeing what I've seen makes me question what's going on..

No P&L? What does it say in all the blurb before the numbers about going concern etc?

Go for the interview and if you really need the job then take it but don’t stop applying!!

No P&L is completely standard for smaller companies.

I would check how long they've been incorporated. An insolvent balance sheet is not unusual for small or new company's as it takes a while to get established. But as per PP, don't put all your eggs in one basket / become reliant if you can avoid it as the balance sheet suggests they are higher risk.