Just started working for a new Ltd company, doing their books using sage. It's all a bit of a mess but my querey today is:
One of the directors used a supplier to do some personal work in his house, (plumbing type stuff). There were 2 outstanding invoices for the supplier, the other one was company related. A business check was used to pay both invoices. Only the company invoice was entered onto the system.
So I entered the personal invoice into the supplier module, and coded it T9, so the VAT wasn't entered into the company VAT account, and used the N.C for director loans.
I then went into the bank module, and made a payment for both invoices with the relevant cheque number so when I come to reconcile it will be correct.
Have I done this correctly, especially with a view to the VAT element, I don't want any come backs.
You should be OK with that. None of your entries should have any effect on anything. I think I would have been inclined to post a bank payment for the private bit directly to DLA.
Yes that seems fine. You have correctly put the gross personal expense into the Directors Loan account which is the correct way to do it.
Although I wouldn't have put the personal invoice through the system, but just posted the personal element of the payment to the directors loan account.
Thank you for the reply's. That was really helpful.
My next querey is that all three directors put their personal telephone bills through the business accounts, and the business pays for them. The previous book keeper used to work out the VAT as, of course, personal phone bills say they are not a VAT receipt, and the whole bills are charged to the telephone nominal. Even if they can claim part of their home phone's as an expense, and the rest as a wages perk the VAT element and nominal seems wrong to me and will give an incorrect VAT payment and incorrect business expense. Any thoughts on this?
