Free Agent

[onerealbeanie]

Hello, I do my accounting in Free Agent but I'm struggling with it quite a lot!

1. I had a sale through a separate billing system, this was paid by Stripe. Let's say the amount was £10.00. £9.00 of it was for a website domain that was immediately passed on to the website domain company. That left £1.00 remaining. How do I record this in FreeAgent please?

2. A regular payment comes in each month from Stripe to the bank account. How do I record this please?

Is it essential to back up the payment with paperwork. Essentially, there has not been many sales and more outgoings so I'm not very far behind with the accounting but the VAT return is due today. So, the most important thing is that we're paying the correct VAT (even though it is not much, it is the principle).

I get the basic way of recording a sale - but - it's with the fact that Stripe is involved. I don't raise invoices through FreeAgent. Also, with a large amount of the money going back out, I don't want to be taxed for it as income whilst acting as the in between man for website domain leasing.

Thanks ?

 

[Scalloway]

I don't know Free Agent but in any other accounting system I haveéused I would set Stripe up as another bank account and deal with transactions through that. Money coming from Stripe to your business account would be dealt with as a bank transfer.

 

[GLAbusiness]

I use FreeAgent, but I use it for invoices as well. So, if I understand your example, you have made a sale of £10. In my case this would be entered as payment of the invoice. Then the £9 you pay to the domain company would be entered as cost of sales. Both should include a VAT element (if you are registered) - you enter the vat rate or vat amount when you record the transactions.

I don't keep any paper records, but I have multiple electronic copies on site and off site.


You will be taxed on the profit, not the turnover.

 

[Scalloway]

You will be taxed on the profit, not the turnover

The OP is VAT registered so will pay VAT on their turnover so it is important to keep proper records.

 

[GLAbusiness]

I agree that good records are crucial. However, surely the VAT he pays is not related to turnover, it is the difference between input and output VAT

 

[Scalloway]

surely the VAT he pays is not related to turnover, it is the difference between input and output VAT

Input VAT is based on turnover.

 

[GLAbusiness]

But input VAT is not a pure function of turnover. If OP supplies zero rated product then that element of turnover would not count for input VAT. Equally, output VAT is based on Vatable purchases. So, the VAT payment owed is not a direct function of turnover. Two companies with very different turnover could end up paying the same amount of VAT

 

[Argentum Tax]

But input VAT is not a pure function of turnover. If OP supplies zero rated product then that element of turnover would not count for input VAT. Equally, output VAT is based on Vatable purchases.

Unfortunately you have these the wrong way round.

Output VAT is VAT due on the business Outputs i.e. sales or turnover. Input VAT is VAT incurred by the business on Inputs i.e. costs or expenses. Also if the OP supplies zero rated products (Outputs) then they will not have any Output VAT on them, but they are still VATable Outputs.

Input VAT is NOT based on turnover.

 

[MyAccountantOnline]

Hello, I do my accounting in Free Agent but I'm struggling with it quite a lot!

1. I had a sale through a separate billing system, this was paid by Stripe. Let's say the amount was £10.00. £9.00 of it was for a website domain that was immediately passed on to the website domain company. That left £1.00 remaining. How do I record this in FreeAgent please?

2. A regular payment comes in each month from Stripe to the bank account. How do I record this please?

Is it essential to back up the payment with paperwork. Essentially, there has not been many sales and more outgoings so I'm not very far behind with the accounting but the VAT return is due today. So, the most important thing is that we're paying the correct VAT (even though it is not much, it is the principle).

I get the basic way of recording a sale - but - it's with the fact that Stripe is involved. I don't raise invoices through FreeAgent. Also, with a large amount of the money going back out, I don't want to be taxed for it as income whilst acting as the in between man for website domain leasing.

Thanks ?

I use FreeAgent and have quite a few clients using it.

I think the easiest way to record Stripe transactions is to set up a bank account called Stripe. In that way you record all sales and fees in that account and show the amounts paid into your business bank account as a transfer from Stripe to your bank account.

 

[Vasquez65]

I use FreeAgent and have quite a few clients using it.

I think the easiest way to record Stripe transactions is to set up a bank account called Stripe. In that way you record all sales and fees in that account and show the amounts paid into your business bank account as a transfer from Stripe to your bank account.

Just to jump on this thread, I’m using freeagent to keep records for a new heating/plumbing business, Sole trader, non-vat registered.
when customers pay by card it’s via sumup mobile payments, who pass the payment to my Mettle account after they’ve taken their fee.
My customer invoices show the whole bill so when I attach a copy to the Mettle transaction in Freeagent, I add a note to mention the fee paid.
Is that sufficient?
I’m also struggling with where to put the cost of my Van - as a motoring expense? Under AIA? At the moment the freeagent account is set as cash basis but obviously I can change that before my first (part) year accounts are due . I’m hoping to be in profit by April so shouldn’t need sideways tax relief. I earned £15k under PAYE April-June so have no personal allowance left.
Any help will be greatly appreciated.

 

[Scalloway]

where to put the cost of my Van

How to add an asset in Free Agent

https://support.freeagent.com/hc/en-gb/articles/115001217130-Capital-assets-in-FreeAgent

 

[Scalloway]

My customer invoices show the whole bill so when I attach a copy to the Mettle transaction in Freeagent, I add a note to mention the fee paid.
Is that sufficient?

Are you showing the fee as an expense?

 

[Vasquez65]

Are you showing the fee as an expense?

No because the payment arrives already minus the fee, so it shows up automatically in freeagent for me to approve/explain so I add an invoice copy to the transaction as it doesn’t seem to track across from Mettle.
There is no monthly bill to pay with sum up, it’s a simple 1.65% of the card payment.
I don’t put every fee as an oop expense because it’s not.
I figured I just need to make a record of the fees somewhere for clarity to explain why the customer’s bill amount is different to the amount received, hence the note on my invoice copy. Probably overkill but you never know if hmrc will come knocking.
As to your other answer - under cash basis, you don’t use capital allowances, I know that much. I’ve just stuck the £4k for the Van under motoring expenses and wanted to be sure that was ok.
I was just wondering if Traditional accounting may be better for me, I can’t that it would be currently but wonder if I’m missing something.

 

[MyAccountantOnline]

....
My customer invoices show the whole bill so when I attach a copy to the Mettle transaction in Freeagent, I add a note to mention the fee paid.
Is that sufficient?
......

No it's not, you need to include the fee paid as a cost.

FreeAgent explain how you can do it here https://support.freeagent.com/hc/en...ransaction-for-commission-or-charges-deducted

 

[Vasquez65]

Good job I only have a handful of card payments to amend, thanks.

 

[Vasquez65]

Right, there are no discrepancies because I didn’t create the invoices for the card payments within either mettle or freeagent. I’ve created my own then just attached a copy to the transaction manually as a pdf or screenshot.
So freeagent doesn’t ‘know’ about it.
I’ve now started using FA invoicing but I’ve only had bank transfers or cash payments, which is presumably why there are no discrepancies.
I’ve set up a ‘cash bank account’ in FA to reconcile the cash payments, then taken the ‘cash’ out again via money to user + ‘drawings’.

 

[MyAccountantOnline]

Right, there are no discrepancies because I didn’t create the invoices for the card payments within either mettle or freeagent. I’ve created my own then just attached a copy to the transaction manually as a pdf or screenshot.
So freeagent doesn’t ‘know’ about it.
....

Bear in mind if you've not accounted for fees being deducted your sales are understated. Whilst it has no effect on net profit undertstating your sales means you risk not registering for VAT when required. It's a common mistake.

 

[Vasquez65]

Not going to need to register for VAT, don’t need to turnover that much as I won’t be supplying boilers, I’m concentrating on the smaller jobs and only looking to work 20-25 hours a week. I’m on the run down to retirement in around 8 years and I get a military pension in 2025.
£50k turnover is plenty for me.
I’ll be paying my wife for book keeping etc. (under the lel) to help keep tax down too, she has no other earnings.

 

[ryannell]

I use FreeAgent and have quite a few clients using it.

I think the easiest way to record Stripe transactions is to set up a bank account called Stripe. In that way you record all sales and fees in that account and show the amounts paid into your business bank account as a transfer from Stripe to your bank account.

I'm just wondering if I were to set up Stripe as a bank account, how I could import previous balances and payouts?

 

[MyAccountantOnline]

I'm just wondering if I were to set up Stripe as a bank account, how I could import previous balances and payouts?

Either add the transactions manually or create a CSV to import. FreeAgent explain how to create a CSV file here https://support.freeagent.com/hc/en...-format-a-CSV-file-to-upload-a-bank-statement