Accounting queries

[DJC Electronics]

Hi All,

A few months we finished year one accounts, and so it is coming around to the time soon to be doing tax returns etc etc.

We have also done our accounts in Excel as I has read that other recommend this for the ease. I looked into Accountancy packages over the past few weeks and downloaded and started to use TAS Basics.

I started to use this package and it quickly reminded me how complex bookkeeping is. Is the HMRC going to accept Excel as a figure to tax us from or do they expect to reconcile of figures and transactions against accounts?

We are also just about to register for VAT. Would you recommend us using a proper accounting package for this and to satisfy the guys looking at our VAT Returns?

As we have just started using the accounting package, 14 months after starting business, is it ok to start with an opening balance and then work day by day on the new package, or are we expected to work through every transaction and invoice ever received to fully get the package up to date?

Any help and advice you can offer would be greatly appreciated.

Dan Carson
DJC Electronics

[MyAccountantOnline]

Hi All,

A few months we finished year one accounts, and so it is coming around to the time soon to be doing tax returns etc etc.

We have also done our accounts in Excel as I has read that other recommend this for the ease. I looked into Accountancy packages over the past few weeks and downloaded and started to use TAS Basics.

I started to use this package and it quickly reminded me how complex bookkeeping is. Is the HMRC going to accept Excel as a figure to tax us from or do they expect to reconcile of figures and transactions against accounts?

We are also just about to register for VAT. Would you recommend us using a proper accounting package for this and to satisfy the guys looking at our VAT Returns?

As we have just started using the accounting package, 14 months after starting business, is it ok to start with an opening balance and then work day by day on the new package, or are we expected to work through every transaction and invoice ever received to fully get the package up to date?

Any help and advice you can offer would be greatly appreciated.

Dan Carson
DJC Electronics

Hi Dan

Your Excel records will be the starting point to prepare your accounts. You'll need to adjust the records for allowable and disallowable expenditure, and make claims for capital allowances etc to enable you to complete your tax return. With all due respect if you are struggling a little with bookkeeping you are going to find tax hard going. I suspect on par with me trying to re-wire my house - I'd pass it to a professional:)

If you are going to register for VAT and are happy to look after your own bookkeeping, in my opinion you do really need a good accounts package. I'd look at Solar accounts or if you would consider an online package Accounts Portal. VAT using Excel sheets is hard work and prone to mistakes.

Whatever package you opt for I wouldnt go back and enter all historic transactions - I'd just post opening balances on a given date ideally the start of your new financial year so that you have a full trading year on your records.

[Truemanbrown]

Just be aware that if the business turnover is less than £150,000 then the business can apply to use the flat rate scheme to account for its VAT liabilities.

The business can pay VAT as a flat rate percentage of its turnover if: the estimated VAT taxable turnover - excluding VAT - in the next year will be £150,000 or less. Your VAT taxable turnover is the total of everything that you sell during the year that is liable for VAT. It includes standard, reduced rate or zero rate sales or other supplies. It excludes the actual VAT that you charge, VAT exempt sales and sales of any capital assets.

Generally you don't reclaim any of the VAT that you pay on purchases, although you may be able to claim back the VAT on capital assets worth more than £2,000.

Once you join the scheme you can stay in it until your total business income is more than £225,000.

One obvious effect of joining the flat rate scheme is that the admin involved in preparing VAT Returns is greatly reduced.

If you require any further advice then please give us a call.

[Truemanbrown]

Please be aware of the following.

The business can pay VAT as a flat rate percentage of its turnover if the estimated VAT taxable turnover - excluding VAT - in the next year will be £150,000 or less. Your VAT taxable turnover is the total of everything that you sell during the year that is liable for VAT. It includes standard, reduced rate or zero rate sales or other supplies. It excludes the actual VAT that you charge, VAT exempt sales and sales of any capital assets.

Generally you don't reclaim any of the VAT that you pay on purchases, although you may be able to claim back the VAT on capital assets worth more than £2,000.

Once you join the scheme you can stay in it until your total business income is more than £225,000.

One obvious effect of joining the flat rate scheme is that the admin involved in preparing VAT Returns is greatly reduced.

If you require any further advice then please give us a call.