Sage Bank Accounts - The Book-keepers Forum (UK)

NewStar · Member

Sage Bank Accounts

Sue T · Veteran Member

I have never heard of it - is it in a new version of Sage. I have nominal accounts set up in Sage in the 3100 range for capital introduced into the business by the owner and Owners withdrawals.

Sue

Wella · Expert

It certainly makes sense and make things easier if the owner makes a lot of transaction out of (or into) their own pocket. The only danger is the confusion that, if an owner pays for something and you use that account it will be a credit balance, even though he is effectively putting money in. (remembering that capital introduced is a credit)

I have just created a dummy account in Sage V14 no problem. just need to remember to make sure it appears in the CoA and in the right group.

I personally use VT+ and it has a facility to make custom payment accounts and points it to the right ledger and account. This is similar to what is done in Sage

Bill

NewStar · Member

I have tried it as a dummy too and it certainly would make things easier. How would it handle the repayment to himself from the business bank. Obviously a bank transfer would work but how would it show in drawings?

thanks

Merlion ABS · Senior Member

hmmm good idea I suppose if they have personally paid for items where the invoice is in the purchase ledge.

NewStar · Member

I've now been using it this way for an assignment and its working really well. I just cant get my head around when the sole trader reimburses himself. A bank transfer between business bank and new 3*** account would work geat - but how could i get this to also show in drawings??

-- Edited by NewStar on Thursday 14th of October 2010 10:34:18 PM

attilabenko · Guru

not gonna. you get your reimbursement from the bank account or cash, not from personal a/c .it can work on paper,where you can see the debits,add them up and you would know it is drawings but I can't see it working in sage.

-- Edited by attilabenko on Friday 15th of October 2010 12:19:13 AM

NewStar · Member

Yes thats what i thought.

But maybe a straight bank payment to Drawings would work. On the B/S the sole trader would only have to take the drawings figure away from the capital introduced figure to see how much the company still 'owed' him?

attilabenko · Guru

And the net profit or loss.
I think there is two different scenarios:

1. Sole trader makes lot of payments from own pocket but every time reimburse himself with the same amount.
This I would not treat as capital introduced and drawings, I would do either just cash/petty cash payment ignoring he put the money in and took it out straight away or maybe I would set him up as a supplier.

2 he makes lot of payments out of own pocket but just occasionally reimburse himself and maybe even for different amounts.
This would be the case of capital introduced and drawings. If you create an account for the extra capital introduced (call it bank account if you want) this can work but only for money put in the business. Drawings still should come out from bank/cash and should be shown as drawings on balance sheet unless he is withdrawing capital. Normally he would do drawings from profit made and the capital would be untouched.

I think one of the advantages of computerised accounts is that you can produce things like TB,BS, P&L etc with the click of a button but for this to give you accurate results things have to be set up properly.
What you say above is ok legally as the result is the same and sole trader would have to pay taxes any way you go - as long as you show drawings and profits, that's why there is no tax included in sole trader accounts, but I don't think it would give you a true and fair view of the accounts what is again probably not even a legal requirement with sole traders but it is a requirement in terms of accounting.

That's just my early morning opinion before a cup of coffee :)

Wella · Expert

I find it easier to use the net figure from the account. For convienience I do a month end payment from the owners bank account to the appropriate Drawing or Capital account depending on the balance in the bank account, so if there is a credit balance, i would debit the owner bank a/c and cr capital. If its a debit balance, credit owners bank a/c and debit Drawings. Each month there is a nil balance to start

I usually do this on a month basis for anaylsis but it can be done at year end with just the net amount to adjust Drawings or Capital

Bill

attilabenko · Guru

Hi Bill,

Agree that is a good way to do it. My concern with the creating bank account in 3xxx that payments to the owner would not show as drawings and you still would need to either journal figures or make payments from bank to drawing and from here there is not much difference in what range you are creating this account (you still will have to adjust it periodically)
Having an account as it has been described at the beginninng of topic would be really good if everything would be automatic on it and would not need adjustments, otherwise I don't think it is a new way it is just a version of what everybody is doing now...

Wella · Expert

Hi Attila

Valid points.

BackOfficeGroup · Guru

What is wrong with doing it the old way? If you are reconciling the bank, then any payments made not for business would be posted to the drawings account directly. The bank rec would be as normal. I see that creating a new code etc is more work. IMHO anyway.

P