I've just started doing the books for a new business. The owner is actually a friend and knows nothing about bookkeeping and accounts. He is a welder.
I'm trying to guide him and get him keeping his records straight. I've been going through his bank statements and checking off against Sage. So far we have fully reconciled February which was his first month trading. I've now moved on to March and have been going through posting invoices and payments. I've come across some Cash Point Transactions and he is not 100% sure what the money has been spent on. He is in no way doing anything illegal so I trust his word. How would I go about posting these cash transactions if he cannot find any receipts. He mentioned that he thought one of the transactions was overtime payment to 2 of the staff.
I've told him that going forward if he draws cash from the bank to at least keep a record of what he is drawing the cash for. He does actually keep a spreadsheet of payments and receipts so he has some idea of how to keep track. Just want to get these cash transactions posted up so that I can reconcile the bank for March.
As nothing can be proved Elaine, I wold count it as drawings. And just explain to him that if he were to be investigated by HMRC they wouldn't be so 'forthcoming' with his 'forgetfulness' at remembering what it was for.
I have clients like this too and unless it can be proved, they can't have it, simple. I'm not having it my conscience when they get charged then blame you for the error...
It is of course your choice but if I were you, be a 'hard arse!' Lol :)
Thanks Gary, I will try to get him to remember or provide me with some receipts. I've told him going forward that he needs to keep a record of what he has drawn money for. I'll get him to keep his spreadsheet up to date and may even modify it for him so it is like our cashbooks at work. It records every transaction through the bank as it happens.
Yes, but you can be over hasty on this. Withdrawing money from the bank and taking it for oneself are two separate transactions (as is paying employees) so the withdrawal should always be dealt with first : Cr Bank and Dr Cash Account.
He may keep the money in his pocket, safe or in the bottom drawer and it may be weeks before he uses it or remembers using it. Sooner or later it will become clear that he's taken it for himself or become clear that wages have been paid by cash: Cr Cash Acc - Dr Wages / Drawings.
