Right then, i am due to start doing my sisters accounts as she has started working as a mobile hairdresser.
Im pretty confident in managing her accounts but im a little vague on how the cash is controlled which is paid into the business account. No doubt she will draw on the funds as this will be her wages but im not sure how to account for this. What would be the easiest way;
CR Bank DR Drawings
Correct???
and how frequently would you advise this be done in order to keep her accounts as tidy as possible. Any advice would be gratefully received....
Ive only recently completed the AAT course, you'd think id be a little more confident.
You could create a cash account and enter the money she receives from clients into this (i.e. dr cash account cr sales. Then when she pays the money into the bank you dr bank cr cash account, so that cash account always goes back to zero. Alternatively if she wants to keep some of the cash as drawings without paying it into the bank first, you could just transfer what she keeps from the cash accont to drawings. (Drawings assuming she is a sole trader of course).
If she just withdraws from the bank then yes, you Dr drawings and Cr bank. As to how often, it depends on how often she withdraws money. Does she do it willy nilly or just at the end of the month? I would suggest she pays herself a regular monthly amount. Most important thing to remember is that she keeps personal expenditure and business expenditure separate!
Not to worry about not being confident, there is quite a difference between book learning and putting it into practice and first steps are always a bit daunting. You'll soon get into the swing of it
After reading your reply it is was an 'aahhh, of course!' reaction. May take time but im sure ill get there. At least its my sister so i dont have to put on a pretend brave face.
I've done the books/accounts for my wife's piano teaching business for 15 years or so. She has no separate business bank a/c so don't have income on cash account, just analysed costs. Put a foot note on accounts that all income received is always taken straight out as drawings. Accounts are audited and this was never queried.
Are you sure your wife's accounts are audited? No need for audit unless turnover is £5.6 million ...thats a lot of piano lessons, give the poor girl a rest!!
She teaches all the top concert players, £1000 per hour - soon adds up.
I wish! No, an old accountant friend of ours gives the accounts a once over and then produces our tax returns for a small fee. He is quoted as her agent to HMRC so I assumed that meant her books were audited.
Is that so, well it's money for old rope to him then
I was thinking of training myself up on self-assessment so I could at least do my own tax return and t'wife's (for a small fee of course). No point in paying our accountant chum just for rubber stamping my good work. Might even do the ICB exam too eventually and add another string to my bow.
Would you recommend I invest in a Taxcalc licence for 2010-1? I understand it is quite cheap and easy to use.
I am not sure you need to (yet). I complete the few SAs I have online using HMRC software. Nothing to complicated yet but this year I am looking at 3 partnerships, which will need to be sent using commercial software and am currently looking at Andica Ltd
The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
It was the cost that attracted me, for SA800 up to 5 partnerships <£24. As they are HMRC approved software it should be enough to file the returns, even if it is basic.
I can then enter the individual partners using HMRC online software.
I will research other software when I have enough clients to justify the cost.
Bill
-- Edited by Wella on Saturday 2nd of October 2010 10:20:32 AM
