I am new to the forum this week and already found lots of friendly and helpful advice!!!
I recently found my 1st client, a Sole Trader, uses Sage ( very old version which I was not used to) Vat Registered and inherited a 4 month backlogg. I have eventually got up to date and would likesome advice on the following:
My client uses credit cards and this month received an amount of Cash Back on their recent statement. Where and how do I post??
The Year End date is 31 May, I started working for my client at the start of November and have been changing the date (I think it says out of financial year or something like that) when posting as I spoke with the previous bookkeeper who said this was ok, but it is now getting on my nerves. I contacted my clients accountant this week who said the year end would not be completed for at least another month along with Jnls but said to roll the date over. Where exactly do I change this, I would hate to cause a really big problem if I get this one wrong.
Someone please correct me if I'm wrong (I'm sure you will ) but I would class the cashback as a 'commission received' as I would view it as a commission from the cc company for using card. I would therefore DR the 'Credit Card Account', and CR 'Commison Received'. The cashback will then appear as income upon the P&L Account.
Surely it depends on whether it is a business credit card and being used for purely business transaction. If you are getting some cashback because you do all of your personal shopping at Tesco's on that card is it really fair to call it business/taxable income or a reduction on your personal shopping costs. Do you claim all of the interest and any charges as business expenses?
I'm actually not 100% sure on the answer but I think that angle is worth considering.
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Surely it depends on whether it is a business credit card and being used for purely business transaction.
I see where you are coming from, and maybe there needs to be more clarification, but as the opening post stated it was a Sole Trader, I would have thought the credit card was for business transactions. I've come across this in the travel industry where credit cards are used to pay for last minute hotels, travel, leisure, etc out of the scope of the contracted businesses. Cashback received on the credit card was always treat as an 'other income' stream, (i.e. commission received).
Sorry for the delay in thanking you for your help, i just wanted to clairfy if this was a business credit card. My client has about 6 on the go, this one in particular started in July for which i have posted all the transactions, which are all private drawings, so therefore post this to drawings and not commision??. Whilst on the subject of this particular credit card I have been merrily posting the interest to 7905 credit charges, if this is all private should i have been posting the interest charges to drawings also??
As i said i am new to this forum, do i reply to each response to my queries ,or will this reply only make its way to everyone who answered my query.
Welcome to the forum by the way Your replies will be seen by anyone who reads this thread. and you don't need to reply to everyone each time. Sometimes the thread will run away with itself and several people will have replied before you get a chance to log in and read them! Reply when you can.
If your client has been using this credit card for personal use, then all the interest and credit card charges should go to personal drawings as well. Good luck if he has 6 credit cards on the go! Are they all for personal use, or some personal and some business? He may need keeping an eye on!
Welcome to the forum by the way Your replies will be seen by anyone who reads this thread. and you don't need to reply to everyone each time. Sometimes the thread will run away with itself and several people will have replied before you get a chance to log in and read them! Reply when you can.
If your client has been using this credit card for personal use, then all the interest and credit card charges should go to personal drawings as well. Good luck if he has 6 credit cards on the go! Are they all for personal use, or some personal and some business? He may need keeping an eye on!
Pauline
Hi Pauline,
Thanks for the help.
The card in question has in fact all been personal drawings, but i have posted the interest to 7905. I didn't give it a thought that they should have seperat cards for business and private, this is my 1st client and i have not dealt with credit cards transactions before. Should i have posted the chq payments to the credit card company to personnal drawings also? (if all personal transactions)
My 1st post regarding cash back received on a credit card also relates to this credit card, therefore am i correct in saying allposting for a credit card for private use all go to personal drawings.
I am going to thoroughly check all the statements.
I have a feeling this will not be my last post regarding credit cards.
If the goods bought on the credit card are personal then they should be posted to drawings. If they are a mixture the personal ones to drawings and the business ones to relevant nominal code of the purchase eg stationery, postage. If they are for petrol and the client is claiming mileage allowance then they too should be posted to drawings. HTH
Just thinking that if this is purely a personal credit card and all the payments have been personal payments then you could/should have kept it out of the business accounts altogether. No need to have posted anything. If the credit card payment was made from the business bank account, then you could have posted that to drawings. Just a thought!
The card in question had so far been purley personal until the January statement when my client purchased a new computer for the business.
I think i did ask in my last post if the cheques for this particular card should have also been posted to drawings. Oh but now she has made a business purchase on this card!
With some of her cards she seems to behaving herself but with this card and another one there are the odd business transactions. Should she really have seperate cards or is this quite common?
Any advice or help on the personal and business use of credit cards would be much appreciated
In an ideal world if they are using a credit card there should be one for business use only and one for personal use only, the personal one not going anywhere near the business Of course this doesn't happen in practice with many people and they make business and personal transactions on the same card(s).
If they make mixed purchases on the card and then pay for the whole of the card from the business you will have to separate them out. Personal transactions will be posted to drawings and business transactions posted to the relevant nominal account. Then when they pay the credit card from the business you just do a transfer between the bank and credit card (i.e. credit bank and debit credit card). You don't need to worry about posting the cheque to drawings ....the cheque just credits the bank, you will have accounted for any postings to drawings already.
When visiting my client today i had a chance to look at the credit card accounts in more detail.
She has a John Lewis card which i have been posting personal to drawings and only a couple of items a few pounds (where she has written on the statement) to the relevent expence nominal. When I looked at the credit card account (within the bank) the only postings are the ones that I have posted, there are no postings previous to this, so i have obviously not posted correctly. Looking back at previous payments to the credit card company they have all been posted to drawings (exept mine).
Back to the question should i have posted any of these personal payments at all and therefore the cheques to drawings, should interest also be drawings. I feel a bit of a twit for not seeing this sooner.
On a brighter note all the other credit card balances reconcile with sage
If the credit card consists of all personal expenditure, then no, I wouldn't have posted any of them. If the cheque payment to the credit card company then came out of the business bank account, then I would have posted this as a bank payment to drawings.
and would likesome advice on the following:
