Hi, I have just started out and have a few questions regarding a new client, it would be great to get some guidance on what to do.
Staff are paid cash in hand - are there any guidelines on how this should be done? Should NI, tax etc not be paid also? Should my client not be keeping records of this?
When carrying out reconciliations they don't have all their receipts - how much do I push to get these? If payments are made by direct debit should I insist on statements for these also (Gas/Elec/Phone etc)
They keep no records for money paid into the account - this can be from customers they supply goods to or money they pay in via the Bank - what should I do?
Thanking you in advance for your help here, sorry if these questions are on the basic side - just want to make sure I'm doing things right.
Do you suspect some kind of tax evasion? If so - SAR it and dump the client from a great height!! After dangling him by his feet and telling him why he will have the tax man after him at some point and will pay lots of wonga in fines and penalties. The bump on his head might bring him to his senses.
Lots of questions for one post! No detail as to the type of entity. Nor do you state if he is VAt registered or not.
It is perfectly acceptable to pay wages in cash BUT he must keep accurate payroll records AND report payroll (RTI) BEFORE paying it UNLESS he doesnt need to register for a PAYE scheme due to all of his employees being paid £111.99 a week (or less) BUT only as long as they get NO other expenses/benefits/pensions from anyone else or have another job. Plenty of information on HMRC regarding all of this and I would suggest you consider signing up to one or three of the HMRC webinars.
No receipts then no tax deductions!!!!!!! ie dump it all to drawings or DLA depending on the entity type. Because without them how on earth can you know its business related.
If its for gas etc - you need the invoice (not the statements) so you can determine what actual accounting period they fall into/make sure they are for the business (and not him personally) and are accounted for VAt at the correct tax point. So INISIT on all relevant properly documented paperwork.
Do they not invoice their clients for work done? If not - you need to get him doing this.
Sounds like the worst nightmare of a client if he has been doing this for a while - or maybe just one who needs training, handholding and then he will do it right. So you might have an opportunity to set up some good systems for him. Or even offer to do his invoicing/add on services.
Ask him how the hell you can keep his tax down if he doesnt supply you with the right paperwork - usuall does the trick. That or threat of imprisonment by the tax authorities when he is caught.
__________________
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
Hi, I have just started out and have a few questions regarding a new client, it would be great to get some guidance on what to do.
Staff are paid cash in hand - are there any guidelines on how this should be done? Should NI, tax etc not be paid also? Should my client not be keeping records of this?
As per Joanne's (Cheshire) advice. On a personal note I believe proper payroll should be compulsory, you simply don't always know if an employee is working elsewhere at the same time
When carrying out reconciliations they don't have all their receipts - how much do I push to get these? If payments are made by direct debit should I insist on statements for these also (Gas/Elec/Phone etc)
If it's a smallish business I allow an expense if it's on the bank statement, and is identifiable as a business expense, but receipts for everything should be the norm.
They keep no records for money paid into the account - this can be from customers they supply goods to or money they pay in via the Bank - what should I do?
That can be a nightmare and I've experienced that myself. Presumably they have invoice records, reconcile against these if you can (not easy) if not your client needs to identify what the money received is for.
Good luck with sorting it all, feel free to ask here for more help. If further down the line the client continues in a slap dash way, dump (I love Joannes's description on the best way to do that) and run
Loving that new avatar Joanne
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I am still quite new to the group and appreciate your help.
With regards to your comment -Lots of questions for one post! No detail as to the type of entity. Nor do you state if he is VAt registered or not. Are there unwritten guidelines as to how many questions you can ask in a message and what type of details are required?
I am still quite new to the group and appreciate your help.
With regards to your comment - Lots of questions for one post! No detail as to the type of entity. Nor do you state if he is VAt registered or not. Are there unwritten guidelines as to how many questions you can ask in a message and what type of details are required?
I will check out HMRC webinars as well
thanks
Denise
Hi Denise
No written rules, its just sometimes lots of questions will put off people from answering as they feel they are giving up too much of their spare time, so we do encourage you to split things out a bit.
Always include details about the entity type as there are very different rules for a lot of aspects of accounting between sole traders and limiteds/differing accounting standards (so even for limiteds I would suggest an idea of the size may alos be useful, although in truth we only tend to see sme, micro on here, but its not unheard of to get the larger companies) - saves us having to second guess or try to cover off an answer for all types, which again just puts people off answering.
Also VAT status is very much key - eg on the no invoices for gas/lecky etc due to tax points and the like (and advice about VAT inspections in the event of clients like this one!)
The more detail you can give surrounding one question at a time the better placed we are for giving more specific and relevant advice. Helps us to help you!
Just a thought I had this morning about your non invoicing client - might be worth just introducing this client to a 'receipt book'? Not sure what he does, but would that work for him/business/you?
__________________
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
When carrying out reconciliations they don't have all their receipts - how much do I push to get these? If payments are made by direct debit should I insist on statements for these also (Gas/Elec/Phone etc)
If it's a smallish business I allow an expense if it's on the bank statement, and is identifiable as a business expense, but receipts for everything should be the norm.
Good luck with sorting it all, feel free to ask here for more help. If further down the line the client continues in a slap dash way, dump (I love Joannes's description on the best way to do that) and run
Loving that new avatar Joanne
Hi John
My only issues with this lecky stuff is still the fact that (a) you dont know its business related (maybe Im more cynical!) (b) apportioning the right amounts in the right accounting periods (prepayments/accruals) and more so having had this recently (c) chased said missing bills for a client as was getting fed up of the cavalier attitude of the energy company to discover that they had been woefully overcharging him due in fact to an error by one of their own meter readers, who gave a meter reading that bore no resemblence to their reading (because it was someone elses bloody meter) and this has resulted in them getting a refund of about £3k. Also the VAT status on some of the bills was charged at 20% and some at 5%! Go figure - wont name the power supplier!!!!! Anyway - just another reason in my book to cross those ts.
I love the way that panda is just hanging around - its what I want to do!!!!!!!
-- Edited by Cheshire on Monday 6th of February 2017 10:15:06 AM
__________________
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
Thanks Joanne, I am definitely going to suggest some good housekeeping rules - they have only been going 18 months (sole trader ta a cafe) so just think they don't know what to do, hopefully I can help them get into good shape.
VAT man jumps on cafes with no proper till receipt system (or VAT retail scheme in place, if they dont have a till that provides the proper split of food sales). So at least you are saved that one, for now. Not sure whether or not they are likely to get to the VAT threshold at some point but one to get trained well before they do. That said - HMRC do target cash based businesses such as cafes, so the sooner he can install a proper till and a good system the better. HMRC have been known also to lurk round cafes to clock who they have working for them - they are very keen on ensuring proper PAYE systems are in place and also that they are employing workers legally (and that all the relevant paperwork is in place with regards to that side of the business). I would suggest you spend a couple of hours with them to work out the best way of getting everything required in place.
HTH
__________________
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
Wow, this sounds like a nightmare. Can't really add much more to what Joanne & John have said.
When I was self employed I used to pay staff cash in hand sometimes. However it was all recorded and I had them sign a Starting Declaration (used to be called P46) stating this was their only employment and they all earned under the Lower Earnings Level.
Even if you are exempt from running payroll as I was you still have to keep records of payments made.
Wow, this sounds like a nightmare. Can't really add much more to what Joanne & John have said.
When I was self employed I used to pay staff cash in hand sometimes. However it was all recorded and I had them sign a Starting Declaration (used to be called P46) stating this was their only employment and they all earned under the Lower Earnings Level.
Even if you are exempt from running payroll as I was you still have to keep records of payments made.
And get the declaration on a regular basis too I would say Julie as Ive seen some fall foul when unbeknown to them a member of staff started getting benefits as well, or a pension - ignore is no excuse in the eyes of HMRC, which I think is a tad unfair to the employer in these circumstances, which is why its easiler to just do the payroll mostly. Crazy thing is - its these sort of staff who are most likely to be claiming the benefits given the pay levels for part time work, so I wouldve thought under universal credit that all payroll should be RTI'd as John said. (Mad world!)
__________________
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
In my case it was employing a couple of students as my assistant on a Saturday for a children's activity. The only issue arose when one of them graduated and started to look for additional work.
In my case it was employing a couple of students as my assistant on a Saturday for a children's activity. The only issue arose when one of them graduated and started to look for additional work.
Sounds like you have done some interesting stuff Julie
__________________
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
In my case it was employing a couple of students as my assistant on a Saturday for a children's activity. The only issue arose when one of them graduated and started to look for additional work.
Yes, not quite sure how I got from franchisee for performing arts classes (in your neck of the woods if your username is anything to go by) to Payroll/CIS for a construction company!
-- Edited by pictures on Monday 6th of February 2017 11:46:03 AM
In my case it was employing a couple of students as my assistant on a Saturday for a children's activity. The only issue arose when one of them graduated and started to look for additional work.
Yes, not quite sure how I got from franchisee for performing arts classes (in your neck of the woods if your username is anything to go by) to Payroll/CIS for a construction company!
-- Edited by pictures on Monday 6th of February 2017 11:46:03 AM
Which do you prefer? Reckon some of those subbies will stamp their feet more than the youngsters in your classes! So - whereaouts in Cheshire? (Yes Im there!)
__________________
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
When carrying out reconciliations they don't have all their receipts - how much do I push to get these? If payments are made by direct debit should I insist on statements for these also (Gas/Elec/Phone etc)
If it's a smallish business I allow an expense if it's on the bank statement, and is identifiable as a business expense, but receipts for everything should be the norm.
Good luck with sorting it all, feel free to ask here for more help. If further down the line the client continues in a slap dash way, dump (I love Joannes's description on the best way to do that) and run
Loving that new avatar Joanne
Hi John
My only issues with this lecky stuff is still the fact that (a) you dont know its business related (maybe Im more cynical!) (b) apportioning the right amounts in the right accounting periods (prepayments/accruals) and more so having had this recently (c) chased said missing bills for a client as was getting fed up of the cavalier attitude of the energy company to discover that they had been woefully overcharging him due in fact to an error by one of their own meter readers, who gave a meter reading that bore no resemblence to their reading (because it was someone elses bloody meter) and this has resulted in them getting a refund of about £3k. Also the VAT status on some of the bills was charged at 20% and some at 5%! Go figure - wont name the power supplier!!!!! Anyway - just another reason in my book to cross those ts.
I love the way that panda is just hanging around - its what I want to do!!!!!!!
-- Edited by Cheshire on Monday 6th of February 2017 10:15:06 AM
Hiya
I was thinking more on general receipts, but Denise did mention leccy bills of course. I will stress that I have to be satisfied it is wholly business (eg stationary) before allowing it. In this scenario we now know its a cafe so as long as they don't live on the premises......another potential nightmare if they are!
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
