So on the note of drawings then. My client has been using his bank account as personal and business. I wanted to fully reconcile it but there are lots of personal items on there. Would you bother to reconcile it this time and post all personal stuff to drawings or would you wait and start a fresh with his business bank account?
I've ticked off all of the business expenses apart from these bits of tools bought through paypal.
I am not going to be producing proper accounts for this client this time as I just need to submit a self assessment but was looking at doing a P & L and balance sheet going forward.
Elaine
-- Edited by Elaine R on Friday 9th of August 2013 09:55:41 PM
I have client who has made some purchases on the internet of small tools/drill bits for his business . He has no receipt for these items but he has pointed them out to me on his bank statement.
Should I go ahead and claim the expense to offset his tax liability on the grounds that he has asked me too?
Yes we do this a lot at work when we buy stuff using company credit card. We buy a lot through Amazon. The trouble with my client is he is a young lad in his 20's and probably cannot remember which site he bought them off. I was going to try and google some of the names and see what comes up.
They are very low value most of them, less than £10 per item but there are a good dozen or so of them.
I'm tempted to claim them but make sure I put it in an email that he has requested they are claimed. It's on his head then and not mine.
Being in accounts it's easy for us to remember receipts but for non- accounts people it's not first instinct.
Personally, as I'm currently going through a compliance check with one of my clients, I'm very much of the opinion no receipt then it goes to drawings. It's slightly different with tools which can be seen than with expenses like fuel I grant you. It will encourage him to keep the receipts.
I had some trouble recently with a charity I was working with. They were losing receipts and just writing them on bits of paper. I told them that the check was "could I return a jumper to M&S with this proof" if the answer was no, the receipt wasn't acceptable.
I would maybe then just treat all the business purchases as coming from 'capital introduced'. From my point of view it doesn't make a load of sense reconciling a personal account unless there are just a few personal transactions. Its a pragmatic outlook.
It may be worth reconciling a personal/business account to make sure that you spot every personal item, then present a monthly total to the client - it helps to focus the mind especially if they are having cash flow problems! I do this with one client on a monthly bases.
