As I am new to bookkeeping for small clients (i work full time for a multi national) I have never had to deal with posting use of home office.
I know I need to Dr Use of home office but where do I credit and do I need to set up a specific nominal code to record the office use? Do i just credit creditors?
I have seen the amount in the accounts for the previous 2 years but the books where then done manual so the amount has been adjusted for by the accountant.
I am working on getting everything up to date for the accountant and posting as many transactions as possible.
This is my first year as a self-employed part time bookkeeper so am seeing things I haven't had to deal with before.
All good learning experience and thoroughly enjoying it.
Elaine
-- Edited by Elaine R on Saturday 11th of May 2013 06:17:24 PM
Hi Tim, Not sure I have knocked him into shape yet but it did sound promising as he phone me back to say he had found some pay slips. Have to speak to him tomorrow and see where he is up to. The client with the home office now also wants me to check her VAT returns as she is due to submit and hopefully we will be able to process them on Sage before submitting to HMRC. At the moment the VAT is still being done manually. The client is pretty pleased with me as I am whipping her but into shape as well and she fully understands why I am doing it. Accounts have not always been up to date and she is not fully aware of just how much needs to be done. Got her checking bank statements so that we can reconcile monthly. It's all looking so much better but still some way to go.
you won't necessarily see the entires in the accounts as that entry. More likely you will see it recorded as an expense of light and heat or something similar.
If its a company that we are talking about the double entry would be
Dr Expenses: Heat & Light Cr Creditors: Directors Account
Current standard use of home is £4 per week (there are currently other methods of calculating it but the Government seems to be working on getting rid of those options for small businesses).
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.
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.
The £1000 that was put through as office was shown on a line of it's own but that could be because there was no heat, light etc. I'll try and dig deeper and see where it was posted.
Hi Shaun, Elaine. Just had a compulsion to clean a window. Thatsenuff of that!
To state the obvious, if it is exactly £1000 in the previous two years then i would have thought it was an estimate by the accountant. The etiquette letter(s) could establish this beyond doubt.
I had a similar one by a smashing old accountant where he replied saying the £xxx is for use of home "without any way being specific". I've never forgotten that phrase - and it's over fifteen years ago.
It would be interesting to see how the previous bods here justified the £1000 and not the £4 per week, that I forgot to mention.
Maybe I should have mentioned that the office cost £7000 a few years ago not exactly sure of the year. Could it be that this was capexed and is being written off over a number of years and this is where the £1000.00 comes in? Sorry if that has hindered the previous answers.
Been a while but I've managed to sneak in for a few minutes
I am assuming that it is a sole trader but what i do is debit the use of home as an expense, and credit Capital Introduced, as it is effectively the owner paying the overheads of his home for business purposes.
Depends on the amount of home use. If it is just to write up the accounts (like a plumber, or builder might) then i use the £4/week allowance but I reduce it to 48 weeks to allow for holiday time out (unless told otherwise by client - yep they never take a break, just like me )
If the client actually works from home (like a lot of us) I use the floor area percentage, and adjust where necessary for non work days, or percentage of room use.
If it is for a ltd company, then it is slightly different, and I would do similar to Shaun. It may need to be reported as a benefit.
Bill
PS Just finished my own SA and use the above percentage method for my own use of home expenses
This does put a different slant on things. It sounds like there has been some capital expense involved, which would need a little more investigation. More than just a use of home possibly?
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