Account information

[Leew2143]

Hi all,

I’m currently in the process of buying a large amount of storage shelves for my business & use my ourselves

Little sole trader.

I’m just wondering how it effects the profit at the end of year.


Let’s say we made 10k then spaent 3k on shelf’s.
that would make my profit at 7k

Or would it be say 20% of the opening balance per year
So year one -£500 off

Making my profit 9.5k for the year.

Basically I’m trying to work out for where my profit will stand at the end of year.
& get my head around it

Thanks all.

 

[paulears]

If you are a sole trader doing your own accounts, I suggest you might want to talk to an accountant. 3 grand on shelving for a business only making a profit of 10K sounds very strange.
You have choices - you can treat it as a bill - a cost of doing business and it's expense just goes in the books set against your income, or I suppose you could consider it an asset and depreciate it over a period.I've just bought a load of shelving - nowhere near as much as yours, but I just processed the invoice as a normal expense - In my computerised accounts I just categorised it as an office expense - the nearest one that fitted.

 

[Leew2143]

If you are a sole trader doing your own accounts, I suggest you might want to talk to an accountant. 3 grand on shelving for a business only making a profit of 10K sounds very strange.
You have choices - you can treat it as a bill - a cost of doing business and it's expense just goes in the books set against your income, or I suppose you could consider it an asset and depreciate it over a period.I've just bought a load of shelving - nowhere near as much as yours, but I just processed the invoice as a normal expense - In my computerised accounts I just categorised it as an office expense - the nearest one that fitted.

 

[Leew2143]

Many thanks for your reply back, no this is not the actual figure! It was just a figure I made up to get my point across.
I was just my way of asking, so in other words, class it as a bill. Bring my over profit to 7k

 

[Lisa Thomas]

It's best to hire an accountant for this sort of stuff - mistakes can be very costly. There are plenty on here to choose form. Feel free to dm me if you don't find one on here and want a recommendation.

 

[MyAccountantOnline]

Hi all,

I’m currently in the process of buying a large amount of storage shelves for my business & use my ourselves

Little sole trader.

I’m just wondering how it effects the profit at the end of year.


Let’s say we made 10k then spaent 3k on shelf’s.
that would make my profit at 7k

Or would it be say 20% of the opening balance per year
So year one -£500 off

Making my profit 9.5k for the year.

Basically I’m trying to work out for where my profit will stand at the end of year.
& get my head around it

Thanks all.

Do you use cash basis accounting? (although it's now the default method you may have opted to use traditional accounting)

 

[paulears]

Do you use cash basis accounting? (although it's now the default method you may have opted to use traditional accounting)

For me cash based accounting just was an extra layer of complication, and as the software manages overdue invoices and bills not actually paid - for me it's simpler - although with a few clients I may invoice three months before the contract end date which often means I pay the VAT on a sum that's not actually been paid, so having sufficient funds is really important.

 

[MyAccountantOnline]

For me cash based accounting just was an extra layer of complication, and as the software manages overdue invoices and bills not actually paid - for me it's simpler - although with a few clients I may invoice three months before the contract end date which often means I pay the VAT on a sum that's not actually been paid, so having sufficient funds is really important.

I think you are may be referring to VAT cash accounting rather than the cash basis of accounting which is the default method of accounting for sole traders since 6 April 2024?