Do I log payments against invoice date or date received?

[Sockpuppet]

Does that mean if the week straddles the year end (as is going to happen to me this month), the 07/08 accounts ought to include the four days I'll have worked but not invoiced for?

That seems unnecessarily complex.

Yes, recorded as the opposite of an accrual afaik but I can't remember what its called.

[ittony]

Yes, recorded as the opposite of an accrual afaik but I can't remember what its called.

So does that mean I can pay dividends on the same basis, i.e. based on the work I did in my recently finished year even if I haven't invoiced for all of it yet or received all the payments?

[ASB]

So does that mean I can pay dividends on the same basis, i.e. based on the work I did in my recently finished year even if I haven't invoiced for all of it yet or received all the payments?

Yes. since the wip has value this increases the profit and consequently the shareholders funds and therefore distributable reserves.

But... you do of course need the reasonable expectation that the wip will get paid for.

I suspect it is not entirely unheard of for people to discover they have a certain amount of wip they had forgotten to tell the accountants about when they discover the net shareholders funds have inadvertently gone negative.

[ittony]

Yes. since the wip has value this increases the profit and consequently the shareholders funds and therefore distributable reserves.

But... you do of course need the reasonable expectation that the wip will get paid for.

I suspect it is not entirely unheard of for people to discover they have a certain amount of wip they had forgotten to tell the accountants about when they discover the net shareholders funds have inadvertently gone negative.

Ha! I can imagine.

So, as long as am sure my clients are good for the money, there's no problem in paying a dividend which leaves my business bank account holding less than what will be needed to pay CT later down the line. As long as I do leave enough to cover the CT liability incurred on payments I have actually received?

[Gonzo]

Ha! I can imagine.

So, as long as am sure my clients are good for the money, there's no problem in paying a dividend which leaves my business bank account holding less than what will be needed to pay CT later down the line. As long as I do leave enough to cover the CT liability incurred on payments I have actually received?

If you are sure that the clients (and any intermediary) are good for the money, then there should not be a problem paying a dividend based on what you have invoiced but not yet been paid.

As a backup, I would also make sure that you have a plan to be able to get the CT money back into the business account should the invoices not be paid. You don't want to be in a position where you can't pay the CT.

But I don't think that you will get away with paying dividends out when there is not enough profit in the company (or retained profits) to cover them.

An interesting discussion. I invoice on the first working day of the month for work completed during the previous calendar month, which means that there is wip at the year end. I've never stated that in the accounts though. Oops.

[ittony]

An interesting discussion. I invoice on the first working day of the month for work completed during the previous calendar month, which means that there is wip at the year end. I've never stated that in the accounts though. Oops.

Cheers Gonzo, yes interesting. Okay, here's another one, for most of my first accounting year I wasn't drawing a salary, mainly because I hadn't worked out how to run a payroll yet, when I did work it out I started paying at a higher rate that would take me up to 5225 by the end of my personal tax year. If I'd been paying that out evenly from the beginning, more of it would have come out during my first company year, so do I need to account for that liability in my distributable reserves calculations?