m0rpheen started this topic @ 08:54 on 12/12/2003
When keeping your books, does the balance have to reflect the balance in your bank account?
The reason I ask is I am self employed since August, and have only just launched my new business with a new business account. So, at present, I have money going into my personal account for some work, and money going into the business account for others! To balance it I have just been subtracting any business expense from the drawings I would normally take ie:
Income: £1000
Expenses: £25
Drawings: £975
Now my account wont show this, as its my personal account and there are things going in and out all of the time!
Thanks for any advice!
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RE: Book-Keeping & Bank acounts
nickc | 12/12/2003 10:31 AM
You must have a bank account solely for your business - you must be able to show that any income invoiced has gone into the account. Once there, then you can take out any money (either for expenses or to live on) provided you leave enough to cover your tax at the end of the financial year. I would really recommend you get an accountant - shouldn't cost any more than £250 per year. Hope this helps.
Nick
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RE: Book-Keeping & Bank acounts
James Smith | 13/12/2003 10:35 AM
Nick is incorrect here
You do NOT need a business bank account as a sole trader from any legal point of view. It is just a lot easier to deal with when doing the books, and may give a more professional approach as you can bank cheque in your business name.
If you do have a business bank account it should "balance" to what you show in your records as what you have spent and earned, although there will normally be reconciling items (eg things that haven’t cleared the bank, or you haven’t paid for/been paid for)
Regards,
James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
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RE: Book-Keeping & Bank acounts
louis1st | 27/12/2003 12:04 PM
Having a business bank account is a lot easier in general, but most bank will charge you after 12 or 18 months, for every transaction...
I suggest that you try Abbey National Business as they offer a free banking (within some limits)... check out their website www.anbusiness.com
Switching from Barclays to them saved me about £100 a year and I didn't have many transactions every month !
RE: Book-Keeping & Bank acounts
hollyyetmore | 28/12/2003 08:56 PM
Yes, have to agree that Abbey National is working really well for us, the only grizzle is it can be a broohaha to get access to the online banking and a lot of things still need to be done by phone. But I highly recommend it.
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