I attempt to do the accounts for my husband's building company - we use Sage Instant Accounts Version 10 and as far as I know I have posted everything up to our last year end of 31.03.10. I have just run a trial balance and our landscaping work sales were significantly less that I would expect and on further investigation this is because I have posted a labourers invoice for works to the landscaping works sales nominal code - the same one as I post money coming in for patios etc.
Does that make sense? i'm finding it difficult to explain! we have a subcontractors nominal code, and wages and salaries, and landscaping materials sales, but he is his own company, invoicing us for works - so should I be posting it under landscaping materials sales?!
I would appreciate any opinions/advice please, although I totally appreciate that you might not have the faintest idea what i'm going on about!
so: we put up a fence, I post money in to 4000 landscape work sales, for fencing materials i post to 5002, but what about the man we paid to assist with putting up the fence? where does he fit in?
The chap who assisted you would be classed as a sub-contractor and become a cost of sale. His invoice to you would be a debit to the P&L and so would reduce the sales figure if this is where you posted his invoice to. Simply reverse it from sales and enter it as a COS. This will increase the sales figure (and should be what you have in mind), will then show as an expense but the net effect on profit will be zero.
When posting sales invoices you should post all sales within the 4000 range ie 4000 - landscape sales 4002 sale of fencing materials 4001 Plant sales, I presume that you charged your labour element under nominal 4000.
these are off set by your purchases ie 5002 purchase of fencing materials 5003 purchase of plants - direct purchases
Your contract labour purchased would be entered under nominal 6000 - direct labour
for further information I sugest you refer to your chart of accounts on sage.
If you have entered sales under the 5000 nominal range it would not be shown as sales on your P&L but would reduce your purchases.
It might be cost effective for you to have a couple of lesson with a sage constltant or book keeping practice that has sage experienced staff to point you in the right direction, failing that if you have time go to the help button on sage there is lots of info there.
I live in somerset so I can't recomend anywhere sorry, but you might try your local college they might be able to offer some help.
If he gives you an invoice for his labour (which he should if he's self employed) then you'd set him up as a supplier, post his invoice to the purchase ledger using either a 5000 code or a 6000 code (or whatever your subcontract labour cost code is) as your nominal code and then when you pay him you'd post a payment via purchase ledger to the bank to get rid of the invoice off the ledger. You wouldn't always just post a bank payment when you receive his invoice as you may not pay him for ages
If you wanted to see the correlation between landscape sales and landscape purchases then set up a matching 4000 code and 5000 code - e.g 4010 and 5010 so you can see what profit you've made
Yes I think it would be sensible to speak to someone locally, I'll look into that Diana,
Gillyfleur, thank you, yes that all makes sense and that's what I do when we have accounts with large companies, set them up as a supplier, post on the invoices when they arrive and then later allocate the payments.
So explain to me again why I wouldn't/shouldn't just post a bank payment, I match up the bank payments with the invoices I receive... so don't tend to post the invoices until they're paid!
yes he is self employed and does give us invoices, i'll use the subcontractor code.
Only reason to enter an invoice and then pay it off is if you're vat registered and don't pay immediately. The invoice might fall in one vat quarter, the payment in the next. Doing it your way you wouldn't get the vat back until you paid it. Nothing wrong with how you do it if you pay on receipt of invoice
-- Edited by gillyfleur on Thursday 7th of July 2011 05:53:15 PM
