Record Keeping - a few questions


H

Harry

Hi, I still haven't decided on my accounting package.
The cost is still a deterrent, especially as I need
stock control also. I keep trying to look for a
bargain on eBay but there doesn't seem to be many.
I wish I knew people who have upgraded and have a spare
recent edition!

At the moment I am planning to do it manually
and I'd be grateful if you could put me straight on
a few things.

1. What is the best way of recording an expense
paid from a non business account? eg I buy £100
worth of stock on another account. Can I just reimburse
that amount from my business account and record
the payment as "stock" much like I would for petty
cash? I know it isn't ideal but unfortunately I haven't
had my business card/cheque on a couple of occasions.

2. What is the best way to record bank interest and
tax? Every month I get some interest credit and also
a debit of interest tax. How is this best recorded to
ensure I don't pay the tax twice?

3. I am planning to sell some items on eBay. Would
it be acceptable to record a number of individual payments
in 1 lump payment eg from a paypal account, or do I
somehow have to split these sales into their own amounts?
The reality of record created through eBay would be something
like this:

MONTH

Income:
SALES £1000 (eg 3 bulk payments less paypal fees)
-----
Expense(s):
STOCK £400
EBAY FEES £70
POSTAGE £150 (surely not individually recorded?!)

Profit: £380

Do I need to create an invoice for each eBay sale with a breakdown
of item cost, paypal fee, ebay fee, p&p or can I just record the
payments as they actually happen eg ebay fees are monthly and
sale income is unpredictable.
Hope this makes sense and I'll be very grateful for your help and advice.
Thanks!
Harry
 
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R

Ronald Raygun

Harry said:
At the moment I am planning to do it manually
Wise move.
and I'd be grateful if you could put me straight on
a few things.

1. What is the best way of recording an expense
paid from a non business account? eg I buy £100
worth of stock on another account. Can I just reimburse
that amount from my business account and record
the payment as "stock" much like I would for petty
cash? I know it isn't ideal but unfortunately I haven't
had my business card/cheque on a couple of occasions.
You record the expenditure in exactly the same way as
you would have done had you paid by business cheque.
That is to say you debit the "purchases" account, or
whatever. The difference is in the double entry.

If you *are* reimbursing yourself, by writing a
business cheque payable to you, then for accounting
purposes you may as well pretend the cheque was
payable to the supplier, so you just credit the
Bank account in the normal way. You could make a
little explanatory note on the paper invoice which
you file away, to the effect that you advanced the
money and have had it reimbursed.

If you are *not* reimbursing yourself, or not for
some time, then instead of crediting the bank account
you would credit your Capital Introduced account,
assuming you're self-employed (a sole trader).
2. What is the best way to record bank interest and
tax? Every month I get some interest credit and also
a debit of interest tax. How is this best recorded to
ensure I don't pay the tax twice?
Keep an "Interest Received" account. Each month:

Cr Interest Received with net amount (disregard the tax)
Dr Bank with net amount.

As part of the year end adjustments, clear down the
Interest Received account (so that the interest does not
inflate the profit) by treating the interest as capital
introduced, and optionally take the cash out as drawings.

Dr Interest Received with total, to clear to zero
Cr Capital Introduced with same amount

Cr Bank with same amount
Dr Drawings with same amount

You need then to include the interest in the personal section
of your tax return, boxes 10.2 to 10.4.

An alternative method (but which still results in the interest
being shown in 10.2-10.4) is *not* to clear down the Interest
Received account but to leave it in for the profit computation.
In that case you should use the gross amount, and also have an
expenses account for the tax paid. Then at year end the total
net interest income should be included in box 3.50 and not
3.29, and the total net interest should be deducted from computed
profits via box 3.71.
3. I am planning to sell some items on eBay. Would
it be acceptable to record a number of individual payments
in 1 lump payment eg from a paypal account, or do I
somehow have to split these sales into their own amounts?

Do I need to create an invoice for each eBay sale with a breakdown
of item cost, paypal fee, ebay fee, p&p or can I just record the
payments as they actually happen eg ebay fees are monthly and
sale income is unpredictable.
Hope this makes sense and I'll be very grateful for your help and advice.
It's up to you. Presumably you will need to have records from
which you can identify individual sales, or even items, in the
event of a query, but for accounting purposes it should suffice
to use just the bulk values.
 

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