Fixed Assets Sub £100

[Sockpuppet]

Does anyone else bother to depreciate these or do you just write it off 100% first year?

Yes I have an accountant. Yes I have asked him...wondering what others do. I "plan" to give my accountant my accounts made up for him to check. Yes I know I pay him but I did accounting at Uni and the grey matter needs a work out.

[malvolio]

There's no hard and fast rule about what represents a capital item, so if you think the effort wothwhile by all means do it. Most companies work n the basis that the effort of capitalising and depreciating small value items isn't worth the bother, but then their unit admin costs are higher.

But depreciating a £100 asset over three years takes £33 off your CT liability and so gains you £6.60 a year. If you're the kind of person that pays an accountant to redo your own work - which is how he will check your figures - I fail to see how you think that is a worthwhile exercise...

[dude69]

Does anyone else bother to depreciate these or do you just write it off 100% first year?

Yes I have an accountant. Yes I have asked him...wondering what others do. I "plan" to give my accountant my accounts made up for him to check. Yes I know I pay him but I did accounting at Uni and the grey matter needs a work out.

It's considered reasonable, standard accounting practise, to treat these as expenses.

That said, I do treat them as capital generally, just because they are, and all items are pooled, so it's not much effort to handle it. You can write the balance off after a few years.

[Sockpuppet]

Cheers for the replies. I think I may just capitalse then and depreciate. There are only 10 or so items so its not like I am going to have to write a massive asset tracking database.

Its ore a case of me wanting to understand the YE process rather than doing the work then paying to get it re-done for me.

I'd say the amount of time my accounts have taken over the last year is maybe an hour a month. Now some people could argue that therefore they have cost me 12 * Hourly rate. But I only believe that is true if a) I'm maxed out on the work charging as many hours as I am able to and b) if I wasted less than 12 hours of my time over the last year.

Plus, I rather enjoy doing the accounts.

[malvolio]

Fair enough. I gave up accountancy years ago so the idea of doing it for fun doesn't really appeal, but that's just me!

As for cost of accountants, though, my assertion is it costs you double your rate, since you are using free time to do it. Depends if you see time away from work as dead time or as the reward for the work time...

[dude69]

Fair enough. I gave up accountancy years ago so the idea of doing it for fun doesn't really appeal, but that's just me!

As for cost of accountants, though, my assertion is it costs you double your rate, since you are using free time to do it. Depends if you see time away from work as dead time or as the reward for the work time...

I do it myself - it's the only way I can trust my accountant. Year end accounts are very simple in fact, just learn about accruals, basic balance sheets, etc. And day-to-day stuff is minimal really - standing order for PAYE, 15 minutes every 3 months for VAT return online. My accounts for my CT return took me a couple of hours, but will be much quicker next year because I've done it before. And small companies are specifically allowed not to use an accountants - the audit exception is there, and the Companies House small companies annual return is just a pdf with boxes to fill in and click submit: it's hardly auditing Enron.

Most time-consuming thing is keeping a transaction log, but you'd need to do that even if you did have an accountant.

I reckon over the year I've probably incurred an extra five hours, which works out a good deal better than my hourly rate.

[dude69]

Its ore a case of me wanting to understand the YE process rather than doing the work then paying to get it re-done for me.

Would recommed logging on to Companies House Online, download the small companies return pdf. You can use the balance sheet from that for your accounts for HMRC, it's quite helpful. Do a quick P&L (shouldn't be more than about 15-20 numbers on it I reckon) including the depreciation, and non-allowable expenses.

Tack on the boilerplate "The directors have taken advantage of the exemptions conferred by Section A of Part III of Schedule 8 to the Companies Act 1985 on the basis that the company qualifies as a small company." blather, and copy and paste the notes from the Companies House Return.

Stick it together with the P&L, balance sheet, a cover sheet, contents, and company details page (registered address, company number, shareholders).

Then do a quick six line calculation for the CT, i.e. PCTCT = net profit + non-allowable expenses (depreciation, entertainment) - capital allowances. Split it pro rate between CT years if your Y/E is not 31 March, and Bob's your uncle, Fanny's your aunt.