I currently work for a construction company and the accounts I keep are manual on excel and set out as income and expenditure.
I will also be bookkeeping for a manufacturing company and sending items to an external accountant. Will I set the accounts out as a profit and loss account with sales, less cost of sales etc?
Also before I contact the accountant does anyone do this type of work already and can tell me what items they send to the accountant and what level of work they go up to.
At present the furthest I go is up to VAT Return. I'm not very well up on tax
I would say it is quite important to be preparing balance sheet accounts, so a full trial balance would be useful.
The more work you do the less the the accountant has too, therefore two benefits.
Client is happy - he pays less to his accountant, you look good Client pays less to accountant - and more to you!
You don't have to be up on tax, it is making sure a bank rec, sales ledger and purchase ledger are done. Adding Fixed Asset register, accruals and prepayments are even more of a bonus!
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I prepare a year end pack for the accountant. I provide them with all of the source records (invoices, bank statements etc) and a full transaction list for the year or daybook lists. A fully completed extended trial balance showing clearly any estimated figures and a full draft profit and loss and balance sheet.
For a limited company I normally include an estimate for corporation tax as I feel it is helpful for the client to have an idea of what the liability is. I wouldn't normally bother with tax for sole traders or partnerships if they have an accountant as many other personal factors can come into play which I am unaware of.
I then provide full detailed reconciliation of all balance sheet accounts, list of fixed assets and depreciaition calulations, list of accruals and breakdown of prepayments. Dont forget to include a list of creditors and debtors, detailed to transaction level if necessary. And these balances should of course agree to the balance sheet.
Include as much narrative and explanation as necessary for the accountants to follow, be professional and clear at al times.
I agree the more information you provide the better, however it goes without saying that it must be accurate because if you provide excessive information that proves to be inaccurate then you will just acheive scepticism about your work in general.
You should prepare P/L & B/s and prepare one sheet for note & queries which shows the areas which accountant need to check this will reduce his time. Also review your work before sending it. This will increase reliability on your work and also increases your worth with your employer.
I would prepare a proper manufacturing profit and loss account ensuring your direct costs are recorded to give cost of sales as opposed to indirect overhead expenses. It all depends on how far the accountant needs you to go. An accurate trial ballance which differenciates beteen direct and indirect costs may be sufficient. If you're not confident in preparing P & L accounts and balance sheet you may be wasting your time as the accountant will just do them again. An accurate trial balance and supporting documents may be all that they expect. Perhaps you shoul speak with them to find out - which will help to establish a working relationship with them.
