Our company has one credit card in use for expenses only. Is this the correct way to post the transactions?
1. Set up credit card as bank account
2. Set up supplier
3. Create supplier invoice and make payment to supplier from credit card
4. Each month bank transfer to credit card to clear the balance.
I'm relatively new to the role. Previous employee was just posting bank payments for monthly credit card payment to a nominal code. No accounting for individual transactions or receipts.
Also, do i need all the receipts for every transaction? I'm doubtful about getting those. Small company, disorganised, boss can't be bothered etc...
Hi ?? Can you add your first name to your signature bar please via edit your profile.
We do not seem to have had a response to the last question posed!!!!!!!!
Also - we have not as yet had an intro from yourself.
Is this your own or a family business? Or what is your role in it? What is your background? Have you passed any exams and if so which ones/where up to in study? What prof body do you belong to? Is this the only company you work for or do you have other jobs? Where based? What software are you using - type and version?
That sort of thing please.
edited to correct typo
-- Edited by Cheshire on Monday 20th of February 2017 12:14:22 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
Sorry, I had to get the answer quite quickly so managed to find out before the next post was made. I work for a small company doing administration and bookkeeping. I am self studying through the ACCA in the meantime. Software in use is Sage 50 essentials v23.
You only need to set up the supplier account if you have proper invoices and/or wish to track the spend at a particular place. So what you have suggested is correct. Of course, if you do not with to set up a supplier account you can of course key the payments as 'Bank payments', suitably referenced in the usual way so you can find the paperwork on case you need it. ou can use a mixture of oth methods, as with the main current account.
You DO need all the relevant paperwork.
Tell your cant be arsed boss that without the paperwork you cannot save him VAT, nor CT and that the tax man will be ignoring such expenditure when he eventually has an inspection - that usually spurs them on to keep the bits of paper> Lets face it, doesnt really matter if he hands then to you or just dumps them on your desk on a daily or weekly basis - you will sort them for him, so I cant see what the problem is with him emptying his wallet, car glovebox or plastic bag every now and again. You mgiht get the odd one for the local takeaway or some such - just give them back. You cannot know if they are personal or business expenses without at least the bit of paper - no paper then dump the expendiure via 'bank'payment method to his DLA. With the paperwork you can do it properly, albeit you may still end up dumping some of it to his DLA as its quite easy for such folk to get their cards mixed up.
Dont forget to do your Bank rec process as you would any other bank account.
Where are you up to with your ACCA studies? There are a couple of peeps on here studying that at the mo.
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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
Thanks for your reply and encouragement. I'm currently studying for F2, so early days still. So far, so good. Eventually I would like to work in practice to get PERs signed off and some mentoring.
Just a couple of Qs regarding your last response.
1. The bank payments you mentioned, are these from the 'credit card' bank account and then cleared by monthly transfer from the main bank account?
2. Receipts - If there are missing receipts, can these still be posted on Sage? Will the credit card statement be sufficient instead?
3. Personal/Business - As far as I'm aware, this should all be business. However, if I discover personal expenses, how should these be recorded? The credit card is paid in full each month by our business bank account, so if I don't record every entry this will affect bank reconciliations.
4. Do I need to file away every credit card statement?
1. Yes - these are payments from the credit card you are talking about, so they need to be entered on the system as payments from the credit card 'bank account'.
2. Not only can they be posted on Sage, they MUST be posted on Sage if you want the account to reconcile. The bigger question is what you post them as - if there's no supporting paperwork you can't be certain what they are. In some cases, you can be reasonable (e.g. a payment to royal mail is probably postage or stamps) - but be absolutely strict where necessary.
3. Joanne already answered that - post them as payments to the DLA. If you didn't understand the abbreviation, DLA = Director's Loan Account.
4. Yes. These are part of the financial records.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Thanks for your reply and encouragement. I'm currently studying for F2, so early days still. So far, so good. Eventually I would like to work in practice to get PERs signed off and some mentoring.
Just a couple of Qs regarding your last response.
1. The bank payments you mentioned, are these from the 'credit card' bank account and then cleared by monthly transfer from the main bank account? Yes, you can key payments from the credit card bank. And bank receipts if you ever need to
2. Receipts - If there are missing receipts, can these still be posted on Sage? Will the credit card statement be sufficient instead? If these are missing, firstly I would try to get copies, failing that I would post them to the Director's loan account, T9. (see my note above about 'persuading' your boss not to be a silly boy!
3. Personal/Business - As far as I'm aware, this should all be business. Oh in an ideal world! Cant tell you the number of times Ive seen receipts for food shopping, food down the pub with the whole family and worse. Sometimes its deliberate thinking they will get away with it, sometimes its genuinely using the wrong card - so easy when there a few in the pocket. Works the other way too - I have a client who pays for a lot out of his personal out because he has a debit card on that and cannot on the business account as its two to sign on the Bank mandate. Hence why paperwork is key However, if I discover personal expenses, how should these be recorded? Record these as Bank payment, nominal code - Directors loan account, T9. The credit card is paid in full each month by our business bank account, so if I don't record every entry this will affect bank reconciliations. Yes you need to record everything so the current, other accounts and card accounts balance and can be reconciled. Its just about putting the expense to the Director's personal pot - the DLA for Limiteds, or drawings for sole traders.
4. Do I need to file away every credit card statement? Yes - as with ALL paperwork (sales/purchase invoices and receipts) all Bank and card statements needs to be kept for a minimum of 6-7 years - see the HMRC guidelines in this respect.
HTH
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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
For VAT you'll need a receipt. There is no minimum.
If you use a shop which doesn't issue receipts, say like a small hardware shop or such, there is one by me!
Get yourself a receipt book, one with the carbon copy - and get the cashier to fill it in.
I must stress, with VAT you always need a VAT invoice, if the item is less that £250 you can use a less detailed invoice, but it must still contain all necessary VAT information.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Actually one more question. How low value a purchase can a business get away without having a receipt?
My understanding for VAT is that anything under £25 is ok not to have a receipt, but what about tax deductable expenses?
Also, even if there is minimum amount, where do others stand with their clients/company on this? Do you prefer to collect all receipts?
Not sure where you got the £25 info from. Do you have a link?
You need to get receipts and invoices for ALL spend - think petty cash where even the bag of sugar has a receipt. If, as Johnny states, its below £250 it can be a simplified VAT invoice, rather than the usual VAT type invoices you see - which is why till receipts from shops are acceptable. They contain a VAT number and information has to be supplied in a certain way (all detailed in the VAT guides on HMRC). Even the local hardware shop will give you a receipt if you ask them for one.
Other than the VAT issue, to be allowable as other expenses and as I said before if you do not have a receipt then how can you know it belongs to the business? Lets face it £11 in Morrisons might be personal shopping or it might be stationery. Stationery has VAT on it and its allowable - not getting a receipt is costing the business - you will be paying more tax! Why oh why would you do that??!!!!!
Just think of it this way - you should be trying to prevent a TAX (or any sort) inspector from disallowing the expenditure (ie protecting the owners from being fined and worse) by insisting on receipts and invoices etc for everything - that way when you have an inspection (which you will at some point) then you will get a clean bill of health from HMRC!
No receipt, as I say, then you have to assume its not valid business expenses and therefore the owner has to pay it.
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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
"Not sure where you got the £25 info from. Do you have a link?"
This is very (VERY!) out of date, but I have a distant memory that when I registered for VAT however long ago that was, HMRC (er... HMC&E!) issued a large manual to new registrants, and I think somewhere in there there is a bit that does say something about low value transactions with missing receipts are acceptable. I think it specified an amount - though my memory is saying £18.
I wonder if I've still got it somewhere. It would be interesting to see if my memory is playing tricks or not.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
I've re-read the HMRC rules and realised it's referring to not needing a 'VAT' invoice for items below £25. Here is the link I found, which also links to the HMRC page VAT notice 700 19.7.5
-- Edited by chopin_fanatic on Friday 24th of February 2017 12:59:28 PM
Hi Jonathan Firstly - you should NOT be posting links that relate to other BUSINESSES on this forum - please remove your link (via EDIT your post). Besides I think that the site concerned gives misleading information inferring you can claim the coffee/ VAT!!!!!!!!!!!
Secondly - the link that you could post to back up an argument is the HMRC VAT notice itself, referring to the appropriate section (the latter you did. So suggest that is the link you can add)
Thirdly - the VAT notice is just guidance and as such you should consider looking at the actual VAT act itself.
But more importantly for your question the £25 is not a blanket limit - you need to read the item in context - see it refers clearly to items:-
phone calls from public or private phones purchases through coin-operated machines car-park charges (on-street parking meters are not subject to VAT) a single or return toll charge paid at the tollbooth
plus it states you must know that the supplier is VAT registered - you cannot know that in a lot of cases without getting a valid receipt.
Besides that just covers VAT, not the CT side.
HTH
Edited for typos
-- Edited by Cheshire on Friday 24th of February 2017 11:27:15 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
