Hi, When doing tax return (manually in excel, not software) for a client, is it assumed that I'd prepare TB for them? This is a sole trader who has set up a bank account under her own name but uses it for business. She has given me receipts and all sales info and then the bank account statements. I cant make head or tails of some of the things in the statement as they don't tie to receipts or invoice info she has given to me. I would need to go through each line in the bank statement and tie back to what she gave me and then have a chat with her on all other un-reconciled items. This will cost her money. For tax man, he would only inspect what I have submitted and therefore whats going through the bank wouldn't matter, would it, say if she bought herself stuff using the card from that account. He doesn't specifically inspect the bank account? I wouldnt have included that in the expenses, so doesnt matter whats in the bank statement?? Is that correct to assume? So also going back to original question, would I be assumed that I would provide a TB to my client because I am doing her tax return or would you charge separately for doing a tax return and producing a TB? Thanks
I would immediately advise a separate account is set up for the business.
In terms of the work it is up to you. I would say to the client you are going to use the paperwork to prepare the return and ignore the bank statements if that is what you are going to do, particularly for expenses. That way it can be made clear. However, if there are income/ expenses on the statements for which no paperwork is shown then you may miss out some expenses. It would probably be prudent to check the income side of the bank statements at the very least.
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Phil Hendy, The Accountancy Mentor
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I don't think the client is interested in the Trial Balance. TBH it is generally used as the foundation for preparing any set of accounts; however, a small and basic tax return may not require one.
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Phil Hendy, The Accountancy Mentor
Are you thinking of setting up your own practice or have you set up and need some help?
If so a mentor may be the way forward - feel free to get in touch and see how I can assist you.
Most of my clients wouldn't know what on earth to do with a TB and it's not something I would ever produce for a tax only client. However I do produce a basic profit and loss (and balance sheet if appropriate) and so the TB would be used to produce these.
I've found it good practice to give self employed clients what is effectively a set of final accounts as they often need them for say mortgage or loan applications. It takes minutes to do when fresh in your mind but much longer if you have to go back to it at a later date.
I also think it looks professional and if they present them to anybody it's another potential advertising route for my business when they see the logo and who it's prepared by
Hi
I agree with Clare. A lot of sole traders focus in on the tax but mostly because they dont understand the benefits of a P&L and balance sheet (and dont appreciate they may need these documents in the future!)
Also you mentioned this client gave you the Bank statements and all the receipts etc. How do you know you have all the relevant paperwork - I have no single client that gives me everything - I often have a long list of things they have forgotten to hand over. Is the Bank statement actually in the business name - if it is then you would need to check out each entry, even if you then find out they have used the wrong bank account/card and some of the items are in fact personal. (I see this happen lots too!)
Plus do you/client not need some way of tracking capital allowances and depreciation.
I would say tell the customer the benefit of having such and then let them decide - on their head be it if they dont want/pay for it and then find they need it down the line! Or do it as standard in the pricing (as Claire suggests!)
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
