I have a new client who is now registered as self employed and at the date of going self employed his bank is minus £9.02. I have always thought that the entry in Sage is DR/CR Bank and DR/CR Profit and Loss (as told by my tutor and old company accountant) but I stumbled upon a similar post recently and the answers were to post the opening bank balance to the suspense account.
I just want to check which one is correct?
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What! These postings are a wind up arn't they?
Please tell me you are not serious, the client is just starting and you are about to make a posting to retained profit?
Why don't you ask the company accountant? Oh I forgot that's you!
Jokes getting a little stale now.
Opening Balances
If you use the Opening Balance button on each nominal account to enter opening balances then Sage does post the opposite entry to the suspense account. Once the full nominal opening balances have been entered, the suspense account reverts to zero - I suspect that is where the mention of the suspense account comes from.
I'm not an accountant :) so I'll leave where the opening balances should go to those who are but, to use a VERY simple example:
Business starts with £100 in the bank as capital introduced from the owner - to enter these opening balances, you have 2 choices:
1. Use the opening balance button on the record and Sage will post the the nominal and the opposite entry goes to suspense so, having entered your two opening balances, you end up with 4 journals on the audit trail and a zero balance on suspense.
2. Alternatively, simply DR bank and CR capital introduced and you have 2 journals with nothing going to suspense at all.
John
You would have been right
If you had just gone Cr Bank Dr Capital Intro
Are any other assets brought in?
Is this his only bank account?
Does he intend to get a dedicated business account?
ie do you really want this account to be part of the business?
You are correct re: bank / capital introduced but lets be honest here. If you need to confirm this are you really going to take on various clients, prepare their accounts and then give tax advice. Sorry for being blunt but best to consider this now than when HMRC turn up for an inspection.
Business bank account?
If your client has just decided to go self employed and has an overdrawn balance on the bank account I'm guessing that this is a personal bank account that will now be used for a mixture of business/personal use?
If it is, its going to involve lots of postings to the capital account, so just post the £9 there.
In the grand scheme of things its not material so I really wouldn't get too hung up about it. As you get more experience you'll work out the best way for yourself to deal with these sorts of issues whether it involves postings to the suspense account or the capital account for now and then sort them out at a later date.
Good luck.