I've recently started doing a new clients books and his tax year starts the 1st of April. I was wondering how do I enter the amount that is in his bank account at the start?
Also he wants an £8 a week allowance to go towards heating/lighting because he works from home, the main bills for this however come from his personal bank account. How would I record it? Which nom codes would I use?
He is a ltd company but his car is not listed as a company vehicle. He says 75% of all his petrol bills/car maintenance/tax etc is business and the other 25% is private. Because the petrol is paid in cash I enter it as a payment from the petty cash account dont I, with 75% going to the fuel nom code, but what code do I put the other 25% private use to?
And Parking fines what code would they go to?
I'm sorry for all the questions, its just worrying me
Is it a new business, if so Im guessing that the balance on the bank is probably funds introduced and should therefore go to the directors loan account.
You need to set up a new nominal code in the 7000s called 'Use of home as office'. Simply debit this with the relevant amount and credit the directors loan account.As the car is not an asset of the company unfortunately your client cant claim any of the petrol expenses, even if they relate to business use. What you need to do is to get your client to claim mileage expenses from the company e.g. at 40 pence per mile. This would cover the fuel and other running expenses of the car.
As long as the parking fines were incurred in the course of business these can go to motor/travel expenses.
Regarding the Directors loan account would I have to create this as a bank account? Not a nominal code do I?
The business isn't in its first year, would I do a journal entry somehow with the money or just not do anything?
Once I (hopefully) get the mileage figures from the client and do the 40p expenses am I allowed to enter his car maintenance bills at all? Or no because it isn't an asset?
Plus the telelphone bills come out of his business account, he says 75% is business use so would I work out the 75% and post it to the telephone nom code and then where would I put the remaining 25%?
Thank you again Guy, its a great relief to have some help!
I would set up the directors loan account as a normal nominal ledger account in the 2000 range.
With the bank a/c it depends. If you're transferring to Sage from manual records for example, you will need to enter the opening balances as per the closing balances on the last set of financial statements. You can enter these as journals if you wish. If you've taken over from a previous book-keeper and they've given you a back-up copy of Sage and the bank's not balancing (or there's nothing in it), then you will need to look into why? You may need to contact them, or even your clients accountant (if they have one). There may be some opening balance adjustment journals to post on which may make the bank account correct.
The mileage allowance of 40 pence includes a provision for general maintenance so you can't include any further expenses.
It is normal to leave 100% of the expense in telephone in the P&L and to add back the non-business use on the income tax computation once the accounts are finalised.
I'm transferring from manual to Sage. If I did a journal I would credit the bank account but what would I debit the figure to?
So the entering of the parking/speeding fines, can I enter them to a miscellaneous expense? and the same with the car maintenance? Because the money has come out of the bank for them and I have to account for them some how don't I?
If the bank a/c was overdrawn at the start of the period then yes you would need to credit the bank. If you are transferring from manual records you should have a list of balances which you will need to post on to Sage to get the ledgers to agree to the manual records. Normally when transferring from manual to Sage the balance goes to retained earnings (3200), but make sure this agrees to your manual records first.
The fines can be posted to motor/travel expenses, with the caveat that they were incurred in the course of business i.e. no pleasure jaunts at the weekend .
Any payments for car maintenance or any other personal expenses should be posted (debited) to the directors loan a/c.
Yeah the fines were during business driving, tut tut hey!!
There is 3000 in the bank to begin with. It says the code 3200 is the Profit and Loss code, is that ok? Or shall I create a new one
Oh yeah his electricity/heating bills don't come out of his business account so would I pay them out through the petty cash account under the code home as office? Or do I also need to create a bank account thats called Directors loan account so I could pay through that bank account?
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