We rent out office space within our building (we are a registered charity) and have just taken on a new client who runs a radio station. The rent has been agreed and a contra arrangement is being put in place for our advertising. Is it possible to invoice them in a similar way to:
June Rent £100 (Office rentals account)
Contra £50 (our advertising account)
Net June Rent to pay £50
I am hoping that this would be an elegant solution.
Hi Parmi
I may have read this wrong so just to clarify - are you both VAT registered? If so then you can only do self billing of VAT if you enter certain agreements. So Im assuming thats not what you mean and you will issue your invoice for the rent (£100) and get an invoice from the radio for the advertising (£50), you enter the invoices in QB as normal, but just need to know the mechanics of then how to process a contra, so then you only pay £50 net and all the accounts are clear and up to date?
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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
The company is giving them a 50% reduction in rent to be accounted for as a contra arrangement to pay for our advertising. I'm gonna have a play on QB and see if my cunning plan works.
You should invoice the full amount of rent, and the radio station should invoice you the agreed amount for advertising.
Contra their advertising invoice against your rent invoice and have them pay the difference, by all means, but invoice for the full amounts.
While your suggested contras would show the full amount of rent as income and the advertising as a cost, you can't be certain that the radio station will do the same in their accounts; they might just show the net amount as rent - and if they did that, it means they would be understating their own sales. And that's without considering VAT - I note you didn't answer the question of whether the companies are VAT registered.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
The company I work for isn't currently VAT registered because it is a charity. Not sure about the media company but will have to check.
Yes Joanne the mechanics of logging it all on QB. The new accountant is going to help in the future but can only manage that on an ad hoc basis, guessing I will have come talk to the kind folk here with my many many questions.
The company I work for isn't currently VAT registered because it is a charity. Heh? I dont think being a registered charity is a get out of the VAT jail free card? I know quite a few who are registered. Would double check this one Parmi and if they should be and they arent I would run for the hills!!!!!!!!!! Not sure about the media company but will have to check. Regardless of whether or not you contra the items, you need an invoice from them for the full amount and issue yours in the full amount. You need to BOTH agree to any contra or just pay your bill and get them to pay theirs!
Yes Joanne the mechanics of logging it all on QB. Log your invoice and their in the normal way (as customer/supplier as appropriate) Not sure if QB has a contra option, or you may have to do some manual jiggery pokery. Can you see anything in the help files? The new accountant is going to help in the future but can only manage that on an ad hoc basis, guessing I will have come talk to the kind folk here with my many many questions.
Thanks again y'all
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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
Just a question Joanne, as I've never dealt with charities.
Am I right in thinking that a charity only needs to be registered for VAT if it has trading income above the threshold?
Also (and this is from the dark recesses from my mind lol) a charity can appply to have some sort of non VAT status that means they don't have to pay VAT (that's back to 2007/8 so I could be totally wrong)
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I should get my Mum to post on this one as she has had more experience on the Charity VAT front, having dealt with a massive f*** up by an internal Accountant at a charity she has been involved in for 45 years and the lovely HRMC!
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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
From what I have read, QB makes you create separate supplier and customer accounts for contras,
As for the hills; in my short time here I have identified many many things that I am not trained to do and am expected to sort out historical problems going back many years, working part time for minimum wage. Not a happy bunny!
I will probably leave as and when I find a new job. Anyone got contacts in the Bristol area?
Hi Parmi
Oh that sounds a bit weird. How about a different angle. Set up a new Bank account called 'Adjustments' Bank - for Bookkeeper use only or some such. (Useful for a few things other than this!)
Then just use this account to clear the £50 from the supplier account (for the advertising) and £50 customer account (for prt of the rent), add the narrative 'contra' and say the invoice references or something so you can see in 6months what you were doing (well not you, someone else!!!). This brings this adjustments bank to nil and leaves £50 balance for the Radio station to pay - which you clear from your proper Bank once they have paid it.
Simples!
You go girl and good luck for the job hunting.
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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
I worked in Theatre/events/rock n roll. Stage management, stage crew, events management etc. etc. I did do a lot of very exciting things like Hamlet performed in Denmark in the alleged actual castle, popped over to Barcelona for the Deutches Bank Xmas do with Kylie as the after dinner entertainment and going over to the castle in Ireland to make Marilyn Manson's wedding do pretty.
Oh wow, sounds very exciting!! Why the hell did you leave that? Sounds way better than this lot!! Although I can imagine the constant travelling can get in the way of putting roots down. You didnt read one of those 'you can earn £50k' adverts that Shaun is talking about in a different thread I hope! A possible good one if you are looking at doing any kind of self employed work - tap up all of those old contacts. I have a client who works on the telly - he is by far by best client, I get my best rate via him and I do all sorts of other interesting work as well as his books. Just a thought.
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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
