I have just taken on a new client (well she's a friend actually) and on top of her full time job, set up a cake-making/catering business last year. I am basically doing her end of year accounts and setting up spreadsheets for her. Most of her costs are supplies - ingredients for cakes, decorations etc. But where would I analyse packaging such as cake boxes and the boards the cakes go on. Would they just go as cost of Supplies (I did say I would eventually break these down for her to help with costings) or would you create a separate entry for packaging?
Also, I am not bothering with claiming for electricity for 11/12 tax year as she only set it up end Feb/beg March, so am only doing one months worth of accounts to start. But she also wants me to start on 12/13 so she doesn't leave it till the last minute like this time round. How much would you claim for the use of the oven, electricity for the mixer, lighting, refrigeration over the year? Its not a full time job but she probably makes 1-2 cakes a week.
Boxes would be cost related expenses, as for the boards, do they get returned? if not treat them the same as the boxes.
For the elecy for the oven... that's a hard one... I would probably get her to look at her meter before she switches the oven on and then after, work out how much she uses then the cost. This can be applied every time she bakes a cake then. Sounds complicated i know but to work the cost out this would probably be a way to do it. Same could be said for the mixer. as for the fridge... pass... :/
Just a suggestion, but I don't know that it is any more complicated than Googling or looking up the wattage in the oven's documentation and multiplying this by the pence per unit on their electric bill. If I'm not mistaken, this will come out at soo very little cost indeed in a year, that it's not worth compromising the £4 HMRC use of home deduction.
Oh and I am putting business cards & website under advertising, but what about product labels. She puts these on the packaging - would they be part of the packaging or part of advertising?
Do you think that she would probably use enough to be justified in claiming the £4 (is it a week?)
Yes, its per week.
Think of it as compensation for loss of space in the home rather than an expense that needs to be justified.
The government are really pushing this as part of their small business simplification measures.
__________________
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.
Hold that, just got todays note from the ACCA and there are more details in relation to expenses simplification for 2013/14.
The rates for use of home (based on time spent working in the home) are :
£10 (25-50 hours per month) £18 (51-100 per month) £26 (101 or more per month)
So the reality is that the actual rate will be between £2.30 per week and £6.00 per week dependant upon the hours worked at home.
It also looks as though they have backed away from the complete ban on use of floorspace as an alternate measure.
The simplification legislation is still not yet in place so any of the above could still be subject to change.
kind regards,
Shaun.
__________________
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.
OK so for 12/13 she may be able to claim the £4 a week, but 2013/14 it will more than likely be £10 a month??
Also can I just quote my previous post that you may have missed
"Oh and I am putting business cards & website under advertising, but what about product labels. She puts these on the packaging - would they be part of the packaging or part of advertising? "
I would say that the label is part of the packaging.
sorry for the short answers, juggling half a dozen things at once.
__________________
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.
