I may of missed something here but I am a little confused by a new client's question.
A friend of mine has just bought a local cafe business and has asked me to do her books, payroll etc which I have agreed to. She said the Solicitor asked her to contact her accountant and enquire about the fixed assets because the more the business has the less tax she will pay! Does anyone know what she requires from me. They have accepted her offer and the sale is currently going through and she has asked for a list of any fixed assets.
Also I do not yet have payroll software set up from home. Can anyone recommend any, she will be my first payroll client as such from home but I am planning on taking on more clients from home from next year so I require a software what I can use for multiple clients.
Think what they will be looking for is split of the purchase price between goodwill and plant and machinery.
Basically as the purchaser you will want more of the price as plant and machinery as you will get AIA of up to £25k on this. The goodwill you will only get relief over the write off period, which could be as much as 20 years. (depends as well on what the price paid is). I had a client who like yourself recently bought a cafe but they agreed the price and split of goodwill and assets before they spoke to me and the split probably isnt in their favour.
The price however will need to be agreed between buyer and seller and depending of the TWDV of the sellers assets they may be wish to get more of the price as goodwill and less as plant and machinery to benefit from reliefs such as entrepreneurs relief.
Sorry but cant help you re payroll as I outsource all my payroll work.
Ok thanks Mark, so I will note such assets on her SA but I still don't see what the Solicitor requires from me. Unless it is just a list of the fixed assets and their costs which I have asked her to get from the seller.
I intend to do her books and reports on excel at the moment as I don't feel the need to purchase accounts software as yet until I am doing multiple accounts for various clients. Do you think excel is manageable to do a cafe's accounts? What software would you recommend in the long run for multiple clients?
Basically you will need an analysed till spreadsheet showing what is coming in and out (if they pay expenses from the till) and then an analysed spreadsheet of the bank statement. At the year end would get a list of any suppliers not yet paid and bring them in as creditors.
It is a case of getting the client disciplined so they put the information in the order and format that you need it (so bit of education needed).
Re software then comes down to personal preference. I would recommend SAGE and is what I use but others on here wouldnt touch SAGE with a bargepole.
Main contenders would be SAGE, QBooks, VT, or any of the cloud offereing such as Xero, Kashflow, Freshbooks etc.
That is what I plan to do (re the spreadsheets). I will arrange to meet with her again to clarify exactly what information I need from her and how often I need it.
I have used sage a lot over the last ten years in my studies and also when working for different businesses ie sage 50 accounts, sage instant and sage professional but I am keeping my options open as to what software to purchase when I need it for my own business. I will now research the above mentioned packages and maybe trial those I manage to short list.
Mark is right about the split between goodwill and F&F, as vendor wants P&M to be as low as possible and the purchaser wants it to be as high as possible. It's a case of agreeing the split between the 2 parties.
However, the tax treatment of goodwill for the purchaser depends upon the business entity:
- Sole trader would pay CGT on the difference between purchase and sale, so goodwill only an issue when they eventually sell it. - Limited company would write off and get CT relief
Re payroll, we use Moneysoft and have been extremely happy with it (have just started the RTI trial and the first submission seems to have gone through fine), but other members of the forum also recommend 12Pay.
