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Post Info TOPIC: New Sole Trader set up on QB


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New Sole Trader set up on QB


Hi,

 

I have just completed ICB Level 2 and looking to start Level 3 in the near future but have also set up a very small pet sitting business and have got myself a bit confused putting the theory into practice!  I am more familiar with Sage but have recently bought Quick Books as I plan to do more bookkeeping down the line once I am qualified.  The initial set up on QB looks fairly simple but I am looking for a bit of advice about capital.  I have put a small amount of money in which I will add to the bank account which again appears straight forward but I have also just bought a new desk and was wondering if I could add that as a fixed asset?  If so, do I just go to the applicable n/c and add that in? There will be no cost coming out of the bank account as I purchased this with my own money.  I have also been wondering about mileage.  I see that I can claim mileage as I travel to the pet's house.  Can you only claim for the journey there or back home as well?

 

Sorry, this is all probable really basic stuff but any advice would be appreciated.



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TJB


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Hi Tara,

welcome to the forum.

The journeys are there and back, provided that you do trabvel back and not on to another client in which case you would claim client to client. Make sure that you keep a mileage log in the car detailing every journey including reasn for the journey.

For the desk is that a desk used wholly and exclusively for the business? If so, considering the normal cost of desks it may be better to expense rather than capitalise. (i.e. you would not capitalise a stapler even though it meets the definition of a asset. You need to determin an amount that is imaterial to your business where you would expense rather than capitalise. I would say that £100 is a safe level for all businesses and immateriality rises the larger a business is).

Dr equipment expensed
Cr Capital

Thats basically a short hand for the transactions that should have happened which would have been :

Cr Capital
Dr Bank

Cr Bank
Dr Expense Account

The software is just there to (supposedly) make that manual process easier so you need to work out how to reflect those double entries in whatever software you are using. (I use VT, no matter what you use the underlying double entry should be the same)

When doing your accounts don't forget use of home as office.

As a side note, for the mileage generally the 45p per mile tax free for the first 10k is better than expensing travel.

good luck with your new venture and continued studies,

kind regards,

Shaun.


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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.



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I use QuickBooks and it's much easier than Sage so good choice. If it was me I would set up a new bank account called "Personal Bank account". Then I would do "Write cheques" under the banking header and write a cheque for the mileage amount from the personal bank account. I'd use the "Travel" account in the bottom half of the screen. Similarly with the desk I would write a cheque from my personal bank account for the amount and either put it under office expense or one of the fixed asset accounts if it's expensive. At the end of the year. I do a journal to make the personal account zero with the amount going to Owners Drawings.

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Thanks both for your help!

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TJB


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Hi,

Thanks for your advice earlier on in the year! I was hoping you could give me a bit more advice on this?

I have followed what you said and created a personal bank account and put the costs to travel.  I am coming to the end of my first financial year and currently have a minus balance on the personal bank account that I created but no balance in the travel and entertainment expense account.  Is this correct?

Best regards,

Tara



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TJB


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Hi Tara
Doesnt sound quite right on the expenses front - you need to drill down your 'bank payments' for the travel expenses as I suspect they are being debited to a different expenses account. The minus balance is correct as the business owes you the money. When your Accountant does your final accounts and sorts out all the year end bits, tax, capital allowances, producing your accounts they will clear this out as required and they should (put may need prompting) give you the adjustments to complete which you can then do in quick books so that clears the position at the year end. Of course it may still show as overdrawn as you will by then have probably keyed more into the new financial year.

How are the bookkeeping studies going?

 

Edited to correct typos



-- Edited by Cheshire on Tuesday 28th of June 2016 07:03:53 PM

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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



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Hi,

Thanks for your reply

I'm confusing myself a bit with this but... If I go the the chart of account, there is no balance in the balance column, but if I double click 6840 it does shoe a quick report with a total of £431.87, the personal account is £-464.99 so I've gone wrong somewhere but also wondering why when I run a profit and loss report I'm now showing £10.62?  I can see I'm going to have to try and work out what's gone wrong but not too sure where to start looking?? confuse

I've got my final exam on Friday, so I think this will wait until after that!!

Tara



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TJB


Master Book-keeper

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Hi Tara
When is your year end? Just thinking it is a date that is now behind us, so Quick books is just showing you anything that you have keyed since the start of the new financial year in both the COA and P&L. You might need to do a custom P&L and pick the start and end dates for your last year end.

Anyway - concentrate on Friday and good luck, this one can wait a few days.



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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



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Good news on two counts!

I passed my exams, so I am now a qualified bookkeeper (not sure how that happened?!)

Also, you were absolutely right, I didn't have my dates set correctly, I have just changed them to last financial year and everything is as it should be!  Just to confirm though, now I'm at my year end, I need to make a journal entry from the personal account to drawings?  This is probably going to sound very stupid, but.. do I actually physically pay myself the money if I do that?  I would presume not but can't quite get that bit straight in my head?

Tara



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TJB


Master Book-keeper

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Well done Tara. Now the fun really starts!!!!! Plus the real practical learning! It never stops. To start with - getting of your practice licence etc - are you sticking with ICB or swerving to IAB or even going for the AAT next?

Most folk dont physically draw their expenses, usually just use the amount to net off against what they have already drawn. Just clear the personal 'bank' by doing a Bank receipt and coding it to your drawings. Depends on your tax bill - probably one for your Accountant to look at before you do anything.

Be careful about just changing year end dates mid way through as with some software it can mess things up - not sure about quick books so might be worth posing a separate question. I dont use it so cant assist with that one, know older versions of sage you have to run various reports and do effectively some year end type adjustments before you move on.



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position

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