This is going to be difficult to put into words that are understandable....
I've read on various places that people expense items under a certain level rather than have them as fixed assets. Who decides what level this is at? What I'm trying to get at is what if the client isn't really interested in the figures and they are only using a bookkeeper to get their tax return done. It isn't going to make any difference to them as all they are interested in is paying as little tax as possible and the tax won't be affected by this anyway. (By that I mean it will all be below the AIA limit anyway). So would it be up to me to decide or should I try and explain to the client and ask them what level they want it set at?
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Never buy black socks from a normal shop. They shaft you every time.
It's a bit of both. There was a thread on this somewhere where I think Shaun had said £100 or something was his limit (sorry if wrong), but he had seen other accountants capitalise a kettle.
Often it depends on the business, and the length of life of the asset in that business. For example a hairdresser could spend £100 on a quality hairdryer, but they are in use so much they don't last long and she needs another one so not really worth capitalising. A courier might spend £100 on some all singing all dancing can go upstairs sack truck that last for years and should be capitalised.
As far as client input goes, you're probably on your own with most clients!
Does that help?
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
I don't think there's any hard and fast rules. You have to make the decision on a case by case taking into account what seems reasonable and bearing in mind you might have to justify your decision at some point. I'm sure there's a huge difference between a self-employed builder and Barratt's for example.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Thanks both of you. I suppose I'd just need to decide (who decides) depending on how much attention they give the accounts. If they are like the one I described then it will probably be up to me to decide.
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Never buy black socks from a normal shop. They shaft you every time.
As far as client input goes, you're probably on your own with most clients!
How many clients pay much attention to the accounts and how many are only interested because they are legally obliged to have them done for tax purposes?
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Never buy black socks from a normal shop. They shaft you every time.
As far as client input goes, you're probably on your own with most clients!
How many clients pay much attention to the accounts and how many are only interested because they are legally obliged to have them done for tax purposes?
Maybe 20% are interested, the majority of others are only bothered about there being enough money to live on, and how much their tax is going to be.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
It depends how you present them, I believe that it's my job to make them interested. Let me give you an example. I did bookkeeping for a client and gave them some details of their accounts on a monthly basis. Nothing fancy, just a profit and loss for the year so far, aged debtors and a bank rec.
This went on for months until one day we were having a chat and he told me that he never understood a thing about them. From his reaction each month, I thought he relied on them. From there, I changed all the information to graphs and other graphics. Broke down where his money was going each month, who owed what and for how long, how his profits rose and fell over the year. From that point he became really interested.
I think it's about finding how your clients mind works and playing to that. Of course, there'll always be one or two who just do it because they need to, but I think they're also the couple who will either disappear or just keep their head above water.
I've actually seen that the other way around as well.
The bookkeeper was producing overly complex management reports on the assumption (I assume) that clients would feel too embarrassed to ask what all of the information was.
I went through it and found there were flaws with data being carried forwards month on month and the bulk of the graphs whilst looking very impressive might as well have come out of a random number generator.
Turns out that the bookkeeper really didn't understand Excel particularly well at all but because the charts looked pretty none of their clients actually challenged her over what they were being told.... Beggers belief doesn't it!
As it was, in this instance the figures going forwards to the accountant were actually correct as the bookkeeper did understand Sage and as far as the financial accountancy side of things went everything was fine. It was just what they were telling the client throughout the period that was complete tosh.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
That is a fair point Kris, and for many people we do do that. I guess it depends on the type of client, I have more just self assessment clients than I do bookkeeping clients, most of those are one man builders etc, they don't want a graph, they do just want their tax return. For many of the bookkeeping clients we do management accounts etc and go indepth.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
I do agree Jenny. There are always going to be the clients who don't care about the books, as long as they satisfy the HMRC. The strange thing is that any of the builders I've done anything with know what the have in the bank to the penny. They know how much a job will cost almost instantly, they know the margins and the profit and all without any bits of paper. A strange breed.
