Hi all, I am a AAT qualified and a CIMA student and I have a full time job as a finance analyst. I have recently started doing some bookkeeping for a friend who has a childminding business and is a new start-up. My question is, she has a lot of start up costs that I have receipts for but no corresponding bank statements/transactions. I have recorded them as cashbook entries - is this the correct treatment? Obviously I cannot leave the cashbook with a negative balance so how do I go about advising her about offsetting this -£2K balance? A majority of these cost were incurred before she started trading too.
Sorry if these seem like really basic questions but it is not something I do on a day-to-day basis. Any advice would be greatly appreciated.
My name is Jen, haven't done anything with my profile yet - sorry!
I am not MAAT MiP but I have been advised by CIMA that I can do bookkeeping (as long as I do not use any reference to CIMA). My friend is a Sole Trader and I have literally just started sorting her records and bookkeeping as she started trading in September. It is the first time she has run her own business and doesn't have any idea about the finance side of things. I have already advised her to have a separate bank account for her business to keep everything simple.
As she and her partner have several bank accounts would I need to get statements for those to match off the start-up cost transactions? Can you tell me if I am going in the right direction with the cashbook entries? I will have to dig out the old text books as a refresher.
I will certainly look at MLR cover and PII - thanks for the reminder.
CIMA are correct. You also can't make any reference to the AAT until you have MIP.
Sorry if I sound 'stern' about this but you must get MLR and PII before you do ANYTHiNG else.
Ok PII is not a legal requirement but having to flog your house to pay a claim against you isn't what you want, and even though this is a friend you are doing the books for, even friends turn into frenemies when money is involved.
But more importantly MLR is a legal requirement- don't have it and it's a mahoosive fine, or you could find yourself locked up.
ive heard today of HMRC going after a bookkeeper who didn't have MLR- info picked up from her self assessment.
If your client has receipts that are addressed to her/her business then that's sufficient. Where you are unclear who has purchased them then belts and braces checking personal bank statements is a good idea. Ensure that all expenditure passes the wholly and exclusively test. No the new telly in the playroom can't be offset against tax (yes that's been tried on before!)
I would suggest this is capital introduced.
Where is the income going? I assume most of its in cash? She needs to have some kind of receipt book for the cash.
-- Edited by Cheshire on Friday 4th of November 2016 11:46:23 PM
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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
