Hello, I'm new to this forum and new to bookkeeping but I know there's a wealth of expertise out there to tap into!
I am doing some voluntary work at the moment for a new limited company; they have transactions dating back to April (for R&D and some capital input) but only became Ltd in June. Currently they have no accounts. They are not VAT registered.
Am I right in thinking that I need to start the accounts from the first transaction back in April, regardless of the fact they weren't actually registered? Do I need to do anything in the accounts to signify when they became Ltd? And do I need to reconcile and keep the bank statements prior to June - this would probably mean looking at personal accounts rather than business accounts.
Anything else I need to be aware of? Thanks for your help :)
It sounds like you are doing the bookkeeping rather than the accounts. The accounts are prepared using the bookkeeping information. (I just want to be clear about that in case anyone not in the trade is confused!)
If you are using software, the first thing you need to decide is whether you are keeping the automatic year end that Companies House have given, or whether it will be change to perhaps run in line with other tax years (31 March) or just out of preference by the directors.
Once you know what the year end date is definitely going to be, you would set up your software to run to that year end, even if it was a short or long period. Some softwares do allow you to choose your period, but I havent worked with those, so for now, lets say you are using Sage or another software that only allows for a fixed 12 month period.
If the year end is changed to March 2016. You would set up Sage to run April 2015 - March 2016. In this case, you could post your pre incorporation expenses based on the date they fall, as if they start in April, they will get picked up by the software when you run the trial balance.
If you keep the automatic year end, and your first accounting period ends on 30 June. You would set up your software to run July 2015 to June 2016 and anything that was dated before July, you can post as 01.07.15 and put the actual date as part of the detail/narrative line.
If you extend the period, lets say to 30 September 2016, you could set up your software as October 2015 - September 2016, and post anything prior to October as 01.10.15, again with the actual date in the detail/narrative.
All you are trying to do is get a trial balance that will reflect all transactions for the period, including these pre incorporation expenses, whilst also getting your bookkeeping software set up for the ongoing year end. The accounts themselves can detail the actual dates. So, whilst you may set up an April to March year on your software, the accounts for Companies House would say the period was the date of incorporation to 31 March. Its a means to an end.
Regards items paid personally - You can set up dummy bank accounts for the directors, and make bank payments from there, to the expense accounts. Then you can do a monthly or annual journal to the directors account, to clear these dummy accounts to NIL. I normally do monthly, as it gives a better idea of what the closing balance was each month on the directors accounts.
I hope this makes sense and helps!
-- Edited by FoxAccountancyServices on Wednesday 30th of September 2015 09:16:16 AM
Thanks for the response. The info on the financial year end is definitely useful.
I should have clarified - it's manual books for now until they look at software solutions and yes, I should have used the term 'books' instead of 'accounts'! You're right in that I'm only aiming to get to the trial balance for each month - everything else is up to the accountant, so I'll crack on and see how it goes :)
Presumably then, you are on spreadsheet? You dont have to worry about dates so much, in that case. Just include all pre incorporation expenses on your cashbook and have some columns for each director
So..
Date
Reference (the number you write on the invoice... 1,2,3)
Then you want columns to show how paid
Bank
Director 1
Director 2
Then you will have your analysis columns which group expenses.
You will have to include all bank items on the cashbook to get it balance. You can then create a TB from that, or, if using an accountant, that cashbook should be enough. You can give a separate list of invoices paid after the year end, but which were dated within your year.
