PRO TAX SERVICES LTD

Executive Summary

PRO TAX SERVICES LTD exhibits strong initial financial health with positive liquidity and equity for a start-up tax consultancy. The company’s cash position and working capital suggest a stable short-term outlook, but attention to debtor management and cash reserves will be critical for sustained financial wellness. With prudent growth and financial oversight, the company can build resilience and improve its overall financial grade.

PRO TAX SERVICES LTD - Analysis Report

Company Number: 14569645

Analysis Date: 2025-07-29 12:51 UTC

Financial Health Assessment for PRO TAX SERVICES LTD

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1. Financial Health Score: B

Explanation:
PRO TAX SERVICES LTD demonstrates a solid financial footing for a newly incorporated small company. The company has positive net current assets and net assets, indicating a healthy liquidity position and equity base. However, being in its first full financial year with modest scale, there is room for growth and strengthening of financial buffers to achieve a top-tier rating.

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2. Key Vital Signs

Metric	Value (£)	Interpretation
Current Assets	95,472	Sufficient short-term resources to cover immediate needs.
Cash at Bank	63,193	Healthy cash reserves provide liquidity and operational flexibility.
Debtors	32,279	Receivables indicate sales made but not yet collected; moderate risk if slow collection.
Current Liabilities	45,139	Obligations due within one year; manageable relative to assets.
Net Current Assets	50,333	Positive working capital; indicates ability to fund short-term obligations comfortably.
Net Assets	50,333	Equity base is positive; no signs of financial distress.
Shareholders’ Funds	50,333	Reflects retained earnings and capital; sole owner has full equity.

Additional Observations:

• The company has only one employee and one director/shareholder, reflecting a lean structure.
• No audit requirement due to small company exemption, which is typical for micro/small entities.
• The majority of current liabilities relate to VAT and taxes, indicating regular tax compliance activities.

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3. Diagnosis: Financial "Health Check"

PRO TAX SERVICES LTD shows the vital signs of a young but financially stable business "patient." The company has a "healthy cash flow" indicated by a strong cash position relative to liabilities. The positive net current assets resemble a "good pulse," demonstrating that the company can meet short-term liabilities without liquidity strain. The equity base ("shareholders’ funds") is intact, reflecting no accumulated losses—like a stable heartbeat showing no signs of financial distress.

However, as a start-up company operating in tax consultancy, it is essential to monitor debtor days closely, as outstanding receivables (debtors) represent revenue earned but not yet converted into cash. Slow collection here could cause "symptoms of financial stress" such as cash flow tightness.

The company's "immune system"—its ability to withstand external shocks—is currently limited by its scale and reliance on a single director/shareholder. This makes governance simpler but may increase vulnerability to operational risks or market shifts.

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4. Recommendations: Prescriptions for Financial Wellness

1. Improve Debtor Management:

   • Implement tight credit control procedures to ensure receivables are collected promptly.
   • Consider offering early payment incentives to clients to accelerate cash inflow.

2. Build Cash Reserves:

   • Aim to grow cash balances to cover at least 3-6 months of operating expenses, creating a buffer against unexpected costs or downturns.

3. Plan for Growth:

   • As a small entity, explore opportunities to expand client base cautiously while maintaining service quality.
   • Monitor costs carefully to avoid overextension which could lead to "financial fatigue."

4. Strengthen Financial Reporting:

   • Maintain up-to-date management accounts monthly or quarterly to "check vital signs" regularly.
   • Consider external accounting advice to optimize tax planning and compliance.

5. Risk Management:

   • Since the company is reliant on a single director, consider contingency planning for key-person risks.
   • Explore professional indemnity insurance pertinent to tax consultancy.

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