Reply to: Does anyone do their own 'accounting' and admin?

[OrangeHopper]

I have done my own (double entry) accounts since I started many moons ago but I get an accountant to do end-of-year stuff in case I've missed something. For example, last year I didn't realise that the flat rate VAT saving needed to be distributed as part of the deemed payment if the income was caught by IR35.

Xog is also right in that the accountant doesn't always get it right. There have been a number of occasions where I've pointed out where they have done something wrong. I can only do this because I have done my own accounts.

Also note that getting an accountant to do the end-of-year stuff may not be significantly cheaper than using them to do all the work.

[Bluebird]

I got quoted £600 from an accountant for doing just the end of year stuff, SJD charge £85 pcm which = £1020.

So it's an extra £400 or £33 a month for providing info on VAT, PAYE and general queries on anything stupid I think of.

Thats less that I take home per hour - so I think it's a pretty good deal.

[xoggoth]

This keeps coming up and I will add what I always add. Use an accountant if you wish but it always pays to keep abreast of the tax laws and to check your own accounts thoroughly. Too many people think I've got an accountant so I'm ok but people with accountants get into major problems. Heard of one recently who was totally clobbered. Even a good accountant cannot always spot the errors in the records you give him.

[chris79]

The MSC legislation is completely different to IR35. Yes, by setting up and running your own limited company, you will escape being caught by the MSC legislation, but you still may be caught by IR35 which depends on your contract and working relationships, not by how your business is set up.

Sorry but if you are to differentiate that you are a business in your own right to the tax man, then in my own view it's best to be as far away from an MSC / former MSC as possible at this moment in time? I understand what you are saying that IR35 is the working arrangement, perhaps I was wrong to use the term IR35 in there.

[malvolio]

And of course profits are taxed at 20%, so net gain is actually £272...

[Vito]

I pay an accountant to do everything for me and wouldn't have it any other way...he has already saved me several thousand by knowing about a regulation that is pretty well hidden...

I could do it myself I suspect but the reality is that I don't really enjoy it and there is a reason that accountants spend so much time getting qualified and also spend so much time keeping up with the latest laws are regulations. My mum is a book-keeper and has been for many years, but even she recommended that I use an accountant on a monthly basis and pay the c.£70 that it costs...

I can understand people wanting to do it for themselves, but personally I think a good accountant will save you far more than the amount you spend on them.

Also worth noting for anyone reading the earlier post about flat rate VAT, that its not quite the earlier post reads.

I read the earlier post to suggest the following:

£10k invoice x 17.5% VAT = £1,750 VAT paid to your company by the client

£10k invoice x 12% VAT = £1,200 VAT paid to the VAT man

Profit thus being £550

In fact it is as follows:

£10k invoice + 17.5% VAT = £11,750 paid by client

£11,750 x 12% = £1,410 owed to the vat man

Profit thus being £340

So, still a healthy profit and for many contractors I'm sure the best way to go, but I know some people (including me at first) get this calc wrong.

[Sockpuppet]

Making sure that you didn't feck up and stopping you get large fines / convictions for fraud.

[RockyBalboa]

Well I have managed to surf around and found SJD's website and template example.. but I have one burning question:

Maybe I am getting this totally wrong but, if I am required to fill in such a template for services such as SJD's, what exactly are such accountancy firms doing apart from 'totalling it up' at the end of key periods?

[philip@wellwoodhoyle]

I am quite familiar with 'double entry' accounting but do you guys know of a sample spreadsheet I can play around with? If I can do the general stuff myself like set the LTD up and do the day-to-day recording of expenses (etc.) , I'd rather do that and save a few quid.

Thanks.

I'd go for www.vtsoftware.co.uk who do a cash book program free of charge if all you want is book-keeping and VAT Returns. They also have an enhanced version which also does sales and purchase ledgers at a very fair nominal price. Both of these are based on a double-entry ledger system so you have all the usual checks and balances.

I'd avoid spreadsheets if I were you as they are notoriously unreliable unless you put a lot of checks and balances in yourself when you create them - too easy to accidentally "format" a cell as a label instead of a number, so the number doesn't get included in the totals or formulae, or to add a new column or row and not remember to edit the formulae, again leaving it outside the totals.

[philip@wellwoodhoyle]

As for IR35, I'm sorry but if you are using any of the 'former' MSC companies, then you run the risk of being caught under the new April legislation, hence the reason I decided to go it alone in April to remove this risk completely. You have to be seen to be in full control of your own affairs, dictating your own salary, company decisions, etc. not sitting at a desk earning money and having a company process your affairs for you. For me this was an easy choice, simply remove the risk and do it yourself.

The MSC legislation is completely different to IR35. Yes, by setting up and running your own limited company, you will escape being caught by the MSC legislation, but you still may be caught by IR35 which depends on your contract and working relationships, not by how your business is set up.

[chris79]

I am quite familiar with 'double entry' accounting but do you guys know of a sample spreadsheet I can play around with? If I can do the general stuff myself like set the LTD up and do the day-to-day recording of expenses (etc.) , I'd rather do that and save a few quid.

Thanks.

Just buy a copy of sage instant accounts, £70 on amazon... goes as a business expense too.

You might want to check out this thread I made last month when I was starting out, it gives a basic overview as to what is required to get up and running. There might be a few minor errors so don't take it as the bible it was just what I wrote as I was going alone when I started out.

http://forums.contractoruk.com/thread16913.html

[RockyBalboa]

I am quite familiar with 'double entry' accounting but do you guys know of a sample spreadsheet I can play around with? If I can do the general stuff myself like set the LTD up and do the day-to-day recording of expenses (etc.) , I'd rather do that and save a few quid.

Thanks.

[chris79]

OK, a few points, the company returns don't have to be done by a qualified accountant "by law" - there is no such law and many people manage it themselves without help, and likewise many people use unqualified and unregulated accountants.

I really don't think your accountant is charging £15 per hour if s/he is really a qualified or experienced accountant. Are you sure it isn't £15 per "unit" which can be as little as 5 minutes of time (check their letter of engagement). If it really is only £15, I doubt whether they are qualifed/experienced - are they actually a book-keeper, but even then £15 per hour is still low for a book-keeper.

Doing you own books doesn't keep you outside IR35 nor does it make you "more of a business".

It is also worthy of note for other readers that you have only been doing your own books since April, i.e. less than two months, according to your post, so you havn't gone through the year end procedures yet, and may not have even gone through quarter end procedures.

I'm all for people doing it themselves if they wish to, and if they are willing to learn it themselves and take the risks if they don't do it properly, but I don't like people telling half-truths to others and making out it is fact.

My accountant is a friend of the family hence the £15/hour rate he charges, don't take his fee as an indication of his professional status.

You are right in saying I have not yet sent any returns back, but I have all the information packs from HMRC to do this, the only thing that I have not yet done is actually processed a payment with them (you get a payment book etc to do all this)?

As for IR35, I'm sorry but if you are using any of the 'former' MSC companies, then you run the risk of being caught under the new April legislation, hence the reason I decided to go it alone in April to remove this risk completely. You have to be seen to be in full control of your own affairs, dictating your own salary, company decisions, etc. not sitting at a desk earning money and having a company process your affairs for you. For me this was an easy choice, simply remove the risk and do it yourself.

As far as I was aware after reading companies house it was a requirement for an accountant to check your returns, I will double check this but I'm sure I've read this somewhere.

I'm only telling people from my own experience, the risk of running a company is up to the individual, but from a lot of the things I read on this forum people make it out to be far more difficult than it actually is? For a small 'contractor' company it is by no means rocket science.

[philip@wellwoodhoyle]

I give my sage instant account transactions to my accountant who does my company returns (which must be done by a qualified accountant by law).

It also helps put me well outside IR35 as I'm running my own legitimate business, and puts me in full control of what exactly is going on. For anything ad-hoc which I don't understand I just call my accountant who charges £15 per hour for his services

Before April 6th I was using an MSC, after April 6th I decided to go it alone, it took me a few hours to sit down and learn it all

OK, a few points, the company returns don't have to be done by a qualified accountant "by law" - there is no such law and many people manage it themselves without help, and likewise many people use unqualified and unregulated accountants.

I really don't think your accountant is charging £15 per hour if s/he is really a qualified or experienced accountant. Are you sure it isn't £15 per "unit" which can be as little as 5 minutes of time (check their letter of engagement). If it really is only £15, I doubt whether they are qualifed/experienced - are they actually a book-keeper, but even then £15 per hour is still low for a book-keeper.

Doing you own books doesn't keep you outside IR35 nor does it make you "more of a business".

It is also worthy of note for other readers that you have only been doing your own books since April, i.e. less than two months, according to your post, so you havn't gone through the year end procedures yet, and may not have even gone through quarter end procedures.

I'm all for people doing it themselves if they wish to, and if they are willing to learn it themselves and take the risks if they don't do it properly, but I don't like people telling half-truths to others and making out it is fact.

[chris79]

Chris79, day-to-day do, what do you record? Expenses? Also, what exactly do you mean that the accountant does your 'returns'?

Thanks.

This is what I do:-

I run my own payroll once a week using sage payroll. I tell it how much I want to be paid and it prints me a payslip and calculates how much tax/NI I need to pay.

This then transfers into sage instant accounts which is basically a record of all my business transactions (incomings/outgoings/purchases/expenses,etc).

I also keep a spreadsheet of my mileage etc, and enter this into sage instant accounts, along with any other expenses.

Once I have paid from my business bank account my wage and my expenses, the rest is then deemed to be profit, which I then pay myself as a dividend. All the taxes/NI/etc goes into my business savings account where I keep it (and earn interest on it) until it needs to be paid.

Quarterly I send my tax/NI/VAT returns to HMRC, and at the end of the year I give my sage instant account transactions to my accountant who does my company returns (which must be done by a qualified accountant by law).

All in all it is a very simple procedure and takes me about 20 minutes per week. It also helps put me well outside IR35 as I'm running my own legitimate business, and puts me in full control of what exactly is going on. For anything ad-hoc which I don't understand I just call my accountant who charges £15 per hour for his services, although since starting all this I've only had to call him once which was to ask him about the flat rate VAT scheme (I'm registering for this as I don't make many business purchases and it means that I charge my clients 17.5% vat, but only send the vat man 12% back, so I can keep the difference).

For people who say that all this must only be done by an accountant are either lazy or just don't understand what's involved. Before April 6th I was using an MSC, after April 6th I decided to go it alone, it took me a few hours to sit down and learn it all, there's not much that can really go wrong if you keep it simple and do everything correctly. You just need to be organised and make sure you send off your PAYE/NI/VAT etc before the deadlines. There's a lot to get setup at first, a lot of forms to complete to HMRC etc, but once it's up and running it's a piece of p**s.