Categorize transaction

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T

TGFarm

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Feb 9, 2021
4
1
  • #1
    I recently changed from Company's Payroll to a Self Employed Limited Company (new). When I sent an invoice to the company last month, they accidentally sent to my personal bank account instead of the company's bank account. I have transferred the next day to my company's bank account.

    Now that I have started using Sage from this month, while categorising my bank transactions, how should I mark this transaction as? Would it be marked as "4010 - Sales - Services" for the client name? or should it be marked as something else?
     
    Solution
    MyAccountantOnline
    TGFarm said:
    I recently changed from Company's Payroll to a Self Employed Limited Company (new). When I sent an invoice to the company last month, they accidentally sent to my personal bank account instead of the company's bank account. I have transferred the next day to my company's bank account.

    Now that I have started using Sage from this month, while categorising my bank transactions, how should I mark this transaction as? Would it be marked as "4010 - Sales - Services" for the client name? or should it be marked as something else?
    Click to expand...

    The correct way to record the transaction is to show the invoice being paid on the date you received the funds - the receipt will credit sales and debit the directors loan account. Then when you transfered...
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    GLAbusiness

    GLAbusiness

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  • #2
    Surely its just payment of an invoice - it does not really matter how the money got to the business bank account

    The OP also raises a few flags in my mind:

    Is it self employed or a LTD company - it cannot be both

    It reads as though the OP is doing the same work as when PAYE but now is not an employee. I would be checking out IR35 status for this one
     
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    TGFarm

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    Feb 9, 2021
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  • #3
    GLAbusiness said:
    Surely its just payment of an invoice - it does not really matter how the money got to the business bank account

    The OP also raises a few flags in my mind:

    Is it self employed or a LTD company - it cannot be both

    It reads as though the OP is doing the same work as when PAYE but now is not an employee. I would be checking out IR35 status for this one
    Click to expand...
    Hey @GLAbusiness thanks for the reply. I used to work full time for them a while ago but now that I am planning to do the same work for other clients as well I have setup a Limited company and now billing them through my Limited company. Now that it is a limited company, both me and my husband are directors and providing consultancy services through that instead. Should there be something more that we need to consider?
     
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    GLAbusiness

    GLAbusiness

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  • #4
    A lot depends on the contract you have with your former employer. They have a duty to check that the contract is not subject to IR35.

    I am in a similar position. I get a formal status declaration e.g.

    You have the right to provide a substitute to perform the services set out in the contract.
    You have the right to decide your working hours and working location and how the work is done.
    You have the obligation to put right any work that we are not happy with at your own cost.
    You have the right to work for other companies without our permission.
    You buy your own equipment and fund your own travel costs.
    Your status was confirmed using HMRC's CEST tool, the results of which are appended to this Status Determination Statement.
     
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    MyAccountantOnline

    MyAccountantOnline

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  • #5
    TGFarm said:
    I recently changed from Company's Payroll to a Self Employed Limited Company (new). When I sent an invoice to the company last month, they accidentally sent to my personal bank account instead of the company's bank account. I have transferred the next day to my company's bank account.

    Now that I have started using Sage from this month, while categorising my bank transactions, how should I mark this transaction as? Would it be marked as "4010 - Sales - Services" for the client name? or should it be marked as something else?
    Click to expand...

    The correct way to record the transaction is to show the invoice being paid on the date you received the funds - the receipt will credit sales and debit the directors loan account. Then when you transfered the company funds to the company bank account it should be recorded as a directors loan repayment.

    Sage isnt sometimes the easiest for a new business to use.
     
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    GLAbusiness

    GLAbusiness

    Business Member
    • Business Listing
    Sep 20, 2008
    564
    2
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    www.isense.biz
  • #6
    MyAccountantOnline said:
    The correct way to record the transaction is to show the invoice being paid on the date you received the funds - the receipt will credit sales and debit the directors loan account. Then when you transfered the company funds to the company bank account it should be recorded as a directors loan repayment.

    Sage isnt sometimes the easiest for a new business to use.
    Click to expand...


    To a non-accountant this seems a bit over complicated. To follow this logic if I get paid in cash would I really have to treat it as a directors loan transaction. Surely I would just pay the cash into the bank and record it as an invoice payment?
     
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    MyAccountantOnline

    MyAccountantOnline

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  • #7
    It's the correct way to do it when a director has banked company money.

    Cash is different that's company funds so it doesn't go via the directors loan account. You'd generally have a cash account in your accounting records (or a bank account called cash account) and record transactions using that. Different software/cloud systems have slightly different ways of recording it.
     
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