Profit and loss for the year (with previous year comparatives)

• Click on Reports, then Company and Financial, then Profit and Loss Previous year comparison
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Balance sheet (with comparatives)

• Click on Reports, then Company and Financial, then UK Balance Sheet Previous year comparison
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Trial balance

• Click on Reports, then Accountant and Taxes, then Trial Balance
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Detailed nominal transaction list

• Click on Reports, then Accountant and Taxes, then Transaction detail by account
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Summary aged debt

• Click on Reports, then Customers and receivables, then A/R Aging summary
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

Summary aged credit

• Click on Reports, then Suppliers and payables, then A/P Aging summary
• Amend the date in the in the Dates dropdown box to Last Financial Year
• Save report by clicking File, Save as pdf

This is based on a version of Quickbooks 2010 and there may be small differences to earlier versions.  This article is only for general information and there may be other conditions which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

• Make sure all purchase and sales invoices are entered
• Update your bank reconciliation to the year end and make sure cash balances are correct
• Look at your debtors to see if there are any bad debts and write them off or inform your accountant
• If you have stock complete a stocktake
• This is not all inclusive and your accountant should be able to advise you of specific requirements

If you provide adequate details when entering data your accountant should only need the following information

• Profit and loss for the year (with previous year comparatives if possible)
• Balance sheet (with comparatives)
• Trial balance
• Detailed nominal transaction list
• Summary aged debt
• Summary aged credit

Details of how to save the reports are provided in separate blog posts for Quickbooks and Sage.

Other details you may need to provide

• Wages records
• Stock count
• VAT records

With these details it should be possible to efficiently complete your annual accounts.   This article is only for general information and there may be other factors which apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”

HMRC spam repayment claim email

A client of mine received an email directing him to a website which as you can see looks pretty realistic at first sight.  He was only forewarned by some spelling and grammatical errors in the original email.

To summarise HMRC do not communicate by email and if you are in any doubt ignore it, and at the very least speak to your adviser.

Hacked twitter account

I am usually quite careful of opening links on emails and generally ignore or delete any joke emails that do the rounds.  I was however caught out over the weekend when I got a direct message from an old friend asking if I was in “a picture”, as it was someone I trusted I opened the link and the problems started.  I then spent quite some time amending passwords and links, aswell as apologising to various people who had spotted it as spam.

The moral of this is to be extremely careful of clicking on any linksonline, make sure you have secure passwords which should be changed frequently, and finally ensure you have an up to date backup preferably on and off site.

This article is based on personal experiences and may not apply to your situation so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

What is the core business?

It is so easy to describe your business within its sector as accountants, builders, cleaners for example  but this does not describe what you do.  It is only by being more specific that you can become more focussed not only in your marketing activity but also in the process by which you actually do the work.  Let us consider the builder as an example and the type of work they carry out:

• Commercial (as opposed to residential)
• Public sector (not private sector)
• Fit out (rather than new build)

If they deviated into a domestic new build a new skill set would be required and while they may be able to do the work the disciplines and working practices are different.  Suddenly the efficiencies are lost and this will impact on both profitability and ultimately cashflow.

This may be an extreme but it is worth looking at new ventures and seeing whether they are complimentary to current activity or running along a separate track altogether.  In summary my advice would be to:

• Differentiate your business
• Become a niche – you are not the same as the others
• Concentrate on that core activity

The advice above may not apply to your circumstances, so seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

• For a sole trader you are signing in your own right, ie John Smith as “John Smith” so there is little doubt as to the authority.  There is a variation if you are signing under a trade name in which case you should sign “for and on behalf of” ie John Smith for Smiths Butchers.  If another person signs “for and on behalf of” the business the seller should ensure that that person does actually have authority of the contract may not be enforeable.
• For a partnership, each partner may sign as a “partner” of the business, non partners should follow the same principle as above.
• For a Limited company, the officials of the company should sign as director or company secretary as appropriate.
• For a Limited Liability Partnership (LLP) the partners are known as members and should therefore sign as “member”.  There is an unusual arrangement for LLPs where the partner can be a Limited company or indeed another LLP, these are known as corporate partners and were the issue that started this post.  A person cannot sign for a corporate partner as they are different legal entities and I received the following response from Roy Carlo of Sugiyama & Co regarding this specific point:

If he is signing on behalf of one of the Ltd companies, he should sign it as “Fred Bloggs, Director, for and on behalf of X Co Ltd.” He/she would need to ensure that they have proper Board authority to commit the company to whatever is being signed, particularly if there are financial implications. Although it is probably implicit from their status as a statutory director, they would be binding the company by signing the document and, if they do not have the necessary authority, the company would in all probability still be bound by the document (on the basis of ostensible authority), but it could put the Director in an invidious position!

If another person such as a manager or employee signs “for and on behalf of” the business the seller should ensure that that person does actually have authority of the contract may not be enforeable.

This article may not apply to your specific circumstance so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

1.       Discuss with the new accountant the best time to take over, best done before year end records are handed over or after they are completed.

2.       You should write to the old accountant to explain that you are leaving and who will be taking over.  There is no reason why you should not telephone first if you did get on well, be aware that they may try and talk you out of changing.  You should confirm in writing nonetheless.

3.       The new accountant can then write to the outgoing accountant to ask for “professional clearance” which is a confirmation that there is no reason why they should not act.  At the same time they will ask for various accounting and tax records for the previous year.

4.       The new accountant should not act for you until they have responded but there are steps they can take should the response be slow or non- existent.

5.       You will already have agreed the basic terms and conditions which will include the price, and you should receive a formal engagement letter from the new accountant – this is recommended by all of the professional bodies and beware if you do not have one.

6.       Similarly you will have to provide ID, both photo and address to prove who you are and where you live, once again this is a requirement by the professional bodies.

7.       In order to act efficiently the accountant will want authority to act as your agent and this process will either be completed using a paper HMRC form, or more efficiently using an online procedure.

8.       Finally if you have been using your accountants address as registered office you will need to change this to the new accountant or your own business address.

In summary it is a relatively straightforward process and the most important consideration is that you get the best service for your business.  This article may not apply to your specific circumstance so please seek advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”

1. Go to the webfiling section of Companies House
2. Enter your registered email  address and security code (if this is the first time you have used the service you will need to complete the “new customer Register” section and the security code will be emailed to you)
3. Select whether you are filing for a company or LLP, then enter where the company is registered (probably England & Wales), the company number and the authentication code (if it is the first time you need to add a company and wait for confirmation by post).
4. Select the document you want to file, in this case AR, the Annual Return, you will then be taken through a number of screens where you can check and amend details:
   • Registered Office
   • Location of Company register – this will be the registered office unless these are held elsewhere
   • Company Officers – details of the directors and shareholders, due to Companies Act changes you now have to specify the country/state of residence (ie United Kingdom) for directors of the company.  You will be prompted by highlighted red text if you have not amended any required fields.
   • SIC code – this code (or codes) should represent the activity of the company, there are main categories which are then further subdivided so it should be possible to pick an appropriate one.  A new series has been adopted from 1 October 2011 so you will have to reselect.  There is a useful SIC Code conversion table Companies House.
   • Capital – the number of issued shares in each class and their respective rights must be disclosed.  These rights include voting, dividends, what happens on winding up and whether they are redeemable.
   • Shareholders – details of full names of shareholders required
   • You then just need to make a £15 card payment to complete the exercise.

There are various forms you can complete online including changes of directors addresses and the process is within reach of anyone used to completing online documents.  This article is a brief summary of how to complete an Annual Return and may not apply to specific circumstance so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting – Accountants who “speak your language”

Cost

The actual cost of goods including bringing them in (ie delivery costs)

Net realisable value

The amount that you will realistically be able to sell it for. In many cases stock is held which “may” be useful in times to come but in reality this is not in the foreseeable future. In this case it may be that the value is a fraction of the cost or may actually be zero.

There are a number of different categories of stock and the practical way these are valued varies, but nonetheless all use the same principle. In all cases you should consider whether the realisable value is greater than cost and if not take a view on what value to apply.

Raw materials for manufacturing

These will be valued at cost of bringing the product to site. Clearly if the item is complete as it came onto site then the value will be that shown on the invoice. If there are a number of deliveries at different prices these are usually priced on a FIFO (First In First Out) basis, ie assume the oldest stock is used first. So you may have to refer to a number of prices if the quantity in stock is greater than the items on the last invoice.

The next problem is partially used “raw material”, you will need to value this based on what remains, so if it is a product sold by length you will need to measure the remaining amount and pro rata that by the cost of a complete unit (eg cable or fabric). A similar principle can be used for products sold by weight or volume.

Finished goods

These are valued at the cost of the materials used ,including any scrap or off cuts not useable elsewhere, together with the cost of any labour to produce the product.

Goods bought for resale

These are typically retail goods and are valued similarly to raw materials, this may be the area most prone to realisable value valuations due to obsolescence or old product lines.

The big mistake many business owners make is to value goods or products at sales value, this is an incorrect way of valuing and hopefully the above will be of assistance. This article is a brief summary of the principles of stock valuations and may not apply to specific circumstance so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call.  Alastair Wood, AW Accounting – Accountants who “speak your language”

With the increases in disc capacity file size is not such an issue as it used to be however if you are going to send a file it will be quicker to send and less likely to be bounced by the receiver if it is not too big.  Files can be made smaller by:

1. Reduce the number of dpi (dots per inch), this reduced the resolution but this is not always necessary, I have given some guidance below.
2. Scan in black and white or grayscale, the fewer criteria that need to be covered the smaller the file, if you do not need a colour copy do not save in colour.
3. Save as a pdf, these generally seem to be smaller files than jpegs (ie picture files) although I am uncertain if this is a scientific fact, and they are less easily altered.

For a basic document that can be read but does not need to be reproduced 150dpi in black and white will suffice, I save almost all my “filing” in this format.  For a better quality copy of a text document 200dpi is better, and I only resort to 300dpi for photo ID where a recognisable photo is required.

I hope this will help you in deciding what size to scan a document but if you are unsure about this or would like advice in other areas feel free to call.  Alastair Wood, AW Accounting – Accountants who “speak your language”

1. The very back page or two is the detailed profit and loss account which as the name implies shows the profitability of the business after expenses but before tax.  The first figure will be sales or turnover which is the income for the year based on sales actually completed, but not necessarily paid for.  From this is deducted the direct costs in making those sales, ie the materials or costs which directly result in the sales being made, but will exclude any stock or work in progress which has not resulted in sales by the year end.  This results in a gross profit which should be the profit made on all the individual jobs completed during the year.
2. From the gross profit are deducted expenses or overheads which are all the costs of running the business which are not directly involved in generating sales, which will include salaries, rent and advertising for example.  There will also be other adjustments for depreciation on assets and finance costs resulting in a net profit before tax.
3. The tax is shown on a less detailed profit and loss account which is half way through accounts, normally the first page of figures from the front.  This summarises the headline figures from the detailed profit and loss then shows the tax (which will be approximately 20% of the net profit) being deducted to leave a profit after tax from which dividends are paid.
4. You will need to turn to the notes to the accounts which are towards the back to see dividends, the actual dividend paid is shown in a note at the beginning and the effect on the company reserves shown as one of the last notes.  This will show how much the company was worth at the beginning of the year, how much value was added during the year in profits and how much paid out by way of dividends.  This shows the value of the company at the end of the year which takes us to the balance sheet.
5. The balance sheet is found just before the notes pages and measures the value of the company by netting off the assets of the company against it’s liabilities.  Fixed assets are shown first including vehicles, plant and equipment, each year their value is reduced by depreciation as a measure of their age and usage.  This is shown as an expense on the profit and loss account.
6. Following fixed assets are current assets which include items more easily convertible into cash such as stock, monies owed by customers and others (debtors) and bank balances themselves.  From this are deducted current liabilities which include monies owed  to suppliers and others (creditors) and in taxes: corporation tax, VAT and PAYE.  The net of current assets and liabilities reflects the liquidity of the company, in general this should be a positive amount in order to service the running of the business.
7. If there are long term liabilities such as bank loans or HP these are deducted from the value of fixed and net  current assets to show the asset value of the business.  This will equal the value of shares owned plus the reserves balance shown in point no #4, hence the name “balance sheet”.
8. Some of the figures in the profit and loss and balance sheet, particularly of note the debtors and creditors, are not broken down into their constituent parts and the detail can be found within the notes to the accounts.

The layout of the accounts is laid out in statute and includes parts that may be of little relevance.  Your accountant should be able to explain the bits of relevance to you at the end of the year.

We hope you find the contents of this blog useful; you should of course always seek professional advice for your specific needs.  Alastair Wood, AW Accounting – Accountants who “speak your language”