Hi
I just wanted to check if it is imperative for self emplyed driver to have a monthly or even yearly bank reconciliation. Surely all he would need is a yearly p&l with an asset listing to use for tax stuff, is there really a need for much more detail for tax purposes. Obviously a record of mileage and expenses will be recorded as part of his p&l, just think its over complicating things otherwise.
What's does everyone think??
From the sound of it, Stuart, probably not. I'd need more info to give a better answer, such as what sort of assets does he own and how many contractors does he drive for? You're probably on the right track but who said he needed a monthly reconciliation? Regards, Tim
the bank rec is a tool for us rather than the client. If one truly feels that it is a waste of time (rather than the client telling you that it is as they seem to have real difficulty seeing the point in it) then by all means drop it.
Taking your example, on the P&L front, such will show that expenses should have been paid but not that they were. And of equal importance, the sales figure will show that sales were made but only when put through a bank rec will one see that the money from the sale has been received.
Certainly in the systems that I deal with, without the bank rec the accuracy of one's credit control aged debtor procedures would be a nightmare.
Personally as a matter of course I would always reconcile the bank statements at least before preparing the accounts to ensure that everything that should be included was (and not a penny more).
kind regards,
Shaun.
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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.
Hi
Thanks for your comments, he only work for one contractor and only has 1 van as an asset. I just wasn't sure if it was a requirement for tax returns etc, but obviously not, it does seem like a waste of time to prepare one especially when he has personal expenditure going through the account as well.
Thanks guys
Stuart
I had one of these where he used his personal account for business and personal stuff. All I did with the bank rec was total up each month what the personal stuff was and just posted a lump sum each month to drawings, this way at least it all equalled the bank statement. NEedless to say he had a slap on the wrist and now has a proper business account!
Just seems like a pointsless excerise for a business this small, I'm confident i can definitely get by with out one just wasnt sure if it was a requirement
Thanks
Stuart
I would have his self employed status at the back of my mind and go through the WIP, debtors, creditors, accruals and prepayments motions. A Y/E bank rec. should'nt be a bother with few business transactions and I just curious about monthly ones.
That's quite an interesting one :) I think a comparison may need to be done though of both cash basis and normal basis to check which gives the lowest tax payable. Shame it only starts in the next financial year ;(
A comparison was a point made on the Accountingweb discussion. A further accounting method means finalising the job twice, and therefore charging more to micro-businesses to take into account the effects of both methods on capital allowances and especially tax credits.
One point was it might be useful for clients doing their own accounts and who would use a cash basis anyway. The tax planning aspect may mean it is no longer possible to delegate it and therefore it could cause more work than whether or not to do a bank rec. etc.
