I am doing the books for a self employed interior decorator using Sage instant, she has a business bank account used just for business transactions which im fine with, but some of her payments have come from her own personal bank account, i'm not sure how I would deal with this. If I set it up on Sage then wouldnt I have to reconcile it against the bank statements which would include mostly personal transactions?
Hi, I have this problem with a couple of clients and i have changed the petty cash bank account (1230) in sage to show money for sales/work done paid into the personal account. It is a bit easier for me as the clients sometimes pay for things for the business from this account and any that is left over at the end they take as drawings. hope that helps stephen
But it is simple, first always enter into sage what goes in the bank account and what comes out so you can reconcile it..ok. but do not put in whats not on the bank statement.
When someone pays say an invoice from another account then set up a new bank account say 1230 or the credit card account if you don't use it.
Then set up a new code say 2222 name this as Directors loan account. Journal how ever much the payment is say £1000 from 2222 to 1230 when you come to enter the payment in sage then you would do.. Bank 1230 supplier fill in details and pay in full.
you will find that the 1230 account will be zero.
You must also let the owner know about this as really this person should not be paying business invoices from another account otherwise it becomes a mess, you can also speak to there accountant and let them know too.
And for all those that don't use Sage, just open a Cash account. If the owner is self-employed, then 'Directors Loan' wont do.
Any payments made personally by the owner will come from (credit) the cash account. Any money received that the owner puts straight in their pocket goes to (debit) the cash account.
The other side of each transaction is the same as normal (eg. for an expense debit expense, debit VAT).
In the many years I have spent answering bookkeeping questions, this is in the top 3, so I hope the above helps others too.
