Want to do my Accounts properly

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Hi,

I have been keeping all my Self-Employed data on simple spreadsheets.

I have never (Being Self-Employed) had any accounting software that I can use for bank reconciliation etc.

All I have been doing up to date is Invoices out and Keeping invoices for goods I have then sold.

I'm sure there are things I am paying for I could claim etc. However, I've done things as simply as possible up to now.

I am a very fast learner.

I have recently signed up to Kashflow. I'm sure a few of you will be familiar with this software.

How on earth do I start? Should I back date everything from the 6th of April 2011 up to now? Or start now? But if I start from now, all my figures will be off for the Self Assessment when it comes in April?

I am by no means an accountant, but nor can I afford one.

Being self-employed is Bank Reconciliation necessary?

Also, as I use the one account for everything, my own personal purchases etc, how would I mark these items down to make sure everything adds up?

Kindest Regards

 

[MyAccountantOnline]

If you want to keep it simple do you need something as complex as Kashflow?

VT cashbook is a super free package which may be better suited to what you need/want.

Ensuring the bank account reconciles is really good practice - it enables you to make sure you've entered all payments and receipts into your records.

Keeping a separate bank account for your business is a really good idea if nothing else it generally greatly reduces bookkeeping time as you've got less transactions to enter.

 

[MyAccountantOnline]

...as I use the one account for everything, my own personal purchases etc, how would I mark these items down to make sure everything adds up?

Kindest Regards

They are treated as 'drawings'

 

[Exclusive]

They are treated as 'drawings'

Thanks for the info guys.

In terms of Drawings, do I just mark down as 'Drawing' then that's it? Did I read somewhere you need to debit and credit the same amount in cash or something?

What is the best way of starting this, just putting in my bank balance as it is now and take it from there?

 

[elaine@cheapaccounting]

Just to say that Kashflow is not complex and is a good system used by many of our clients plus our accountants.

For drawings just debit drawings and credit bak or cash depending on the source where you took them from

 

[Exclusive]

Thank You

Could you explain this too me please?

If I am a sole trader, the cash in the bank account is mine yes? So if I go grocery shopping on the weekend, I just need to put down X Amount as Drawings?

I have another source of income for the time being from a part-time job, how should I put those in too?

What is this crediting back Cash about?

Kindest Regards

 

[MyAccountantOnline]

If I am a sole trader, the cash in the bank account is mine yes? So if I go grocery shopping on the weekend, I just need to put down X Amount as Drawings?


Yes that's correct.

I have another source of income for the time being from a part-time job, how should I put those in too?

If its paid into your sole trade bank account record it as capital introduced

 

[elaine@cheapaccounting]

Yes the cash is yours.

Yes for groceries or you just put £x down as drawings - I just gave you the bookkeeping double entry.

Your other part time income doesn't go into Kash Flow but is included when you complete your self assessment


Who said tax isn't taxing - what a lot of ....

 

[Exclusive]

Your other part time income doesn't go into Kash Flow but is included when you complete your self assessment

If it doesn't go in, how will it all add up?

 

[MyAccountantOnline]

What is this crediting back Cash about?

I believe Elaine meant credit bank or cash - it means showing where the payment was made from.

In accounting you have what's called double entry so for a private payment made from your bank account when you record it in your records you debit drawings and credit the bank account.

In reality when you use an accounting package you dont generally have to worry or think too much, if at all, about double entry and debits and credits.

 

[MyAccountantOnline]

Your other part time income doesn't go into Kash Flow but is included when you complete your self assessment

You'd need to record it as capital introduced in KashFlow though if its been paid into the bank account used for the business.

 

[Exclusive]

I am so grateful for the responses, it's making things much clearer.

Now to begin populating Kashflow with info, it asks for a bank start date and a reconcile date?

I have my records all the way back to 6th of April 2011, How far should I go back? Can I input all my invoices and supplier costs and then just do the bank for the past month?

If so, shall I do statement to statement date from my Bank or can I choose any dates?

 

[elaine@cheapaccounting]

Assuming that you are fully reconciling the bank.

Personally I would recommend a separate business and personal bank account else it seems to me that there is danger of making a full time job out of keeping the accounts half of which are nothing to do with the business.



#justsaying

There is no law that you need a separate business account as a sole trader, or that you have to reconcile the bank or produce a balance sheet.

 

[MyAccountantOnline]

Personally I would recommend a separate business and personal bank account else it seems to me that there is danger of making a full time job out of keeping the accounts half of which are nothing to do with the business.

I agree entirely I mentioned it in my first reply

 

[MyAccountantOnline]

I am so grateful for the responses, it's making things much clearer.

Now to begin populating Kashflow with info, it asks for a bank start date and a reconcile date?

I have my records all the way back to 6th of April 2011, How far should I go back? Can I input all my invoices and supplier costs and then just do the bank for the past month?

If so, shall I do statement to statement date from my Bank or can I choose any dates?

I'd enter everything, properly, from day one it'll make preparing your year end accounts and tax return much easier.

 

[Exclusive]

Assuming that you are fully reconciling the bank.

Personally I would recommend a separate business and personal bank account else it seems to me that there is danger of making a full time job out of keeping the accounts half of which are nothing to do with the business.



#justsaying

There is no law that you need a separate business account as a sole trader, or that you have to reconcile the bank or produce a balance sheet.

I just thought it'd be good practice to start? Whilst I can and whilst nothing is too hectic, I'm getting more and more jobs and in the future will need to proove income, so surely a semi-decent set of accounts would help?

When would I do my banking dates then?

 

[elaine@cheapaccounting]

I just thought it'd be good practice to start? Whilst I can and whilst nothing is too hectic, I'm getting more and more jobs and in the future will need to proove income, so surely a semi-decent set of accounts would help?

When would I do my banking dates then?

Whatever you start with will be the way you need to go in the future.

I have advise what is needed for a set of accounts suitable for a sole trader.

To expect to be busier in the future. So as long as you can keep this all up to date then fine.

However ...

we often find that when starting out clients have more time on their hands so go for a belt, braces and over coat approach.


The problem comes when they get busy and cannot keep up with this approach.

• The accounts then go by the way side and nothing is done
• They don’t know their profit, how much tax to budget for and so on
• If they had only set up a reasonable system at the outset things would be different
• A system that gives them the essential info but doesn’t end up doing both the household and business accounts.

I really & sincerely do hope that this will not happen in your case and you’ll be able to cope with the business accounts, personal expenditure accounting, part time job accounting and running the business.



I guess over 25 years of seeing the fresh rush of enthusiasm for the accounts keeping go by the wayside I’ve become a little jaded – forgive me


I can provide a free guide on keeping sole trader accounts if you like:


http://www.cheapaccounting.co.uk/guide.php

 

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I plan to be out of my Part-Time job via August, so then it will just be a case of putting down my drawings.

Then say I turn it limited in a year, then I will HAVE to have a personal and business account and take a wage. I have a plan.

I do though, understand where you are coming from, the only thing, is that with direct debits etc set-up for so many things from this business account. It'd be a right mess, then how would you manage the money, I'd be forever transferring money from the accounts?