Do you always prepare balance sheets for your clients

Do you always prepare balance sheets for your...

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I am just wondering who prepares balance sheets for their clients.  I am particularly thinking if the client does not have a business bank account it would be impossible to do this.  Obviously with a Ltd company the position is different, but with a sole trader?

I am also wondering whether cients actually look at their balance sheet.  The small tader usually knows who owes him what, who he owes money to and how much his cars, property is worth. 

Would be interested in hearing other peoples views on this.

Replies (55)

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By Sheepy306
05th Apr 2012 10:04

Yes
I always prepare balance sheets simply because I find 99% of sole traders usually have at least 1 computer, or plant, or car, or furniture. Then there's the accrual for accountants fees. Other than that everything else goes to drawings but I guess it seems strange not showing a double entry in the accounts!

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Man of Kent
By Kent accountant
05th Apr 2012 12:39

No

What's the point if the client doesn't have a separate business bank account. Assuming the business is relatively small, profit and loss account with a list of assets and capital allowance workings is plenty.

This has been covered before so I don't think you'll get many responses.

https://www.accountingweb.co.uk/anyanswers/sole-trader-and-balance-sheets

https://www.accountingweb.co.uk/anyanswers/balance-sheet-requirement

 

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Replying to Merv:
Me!
By nigelburge
06th Apr 2012 10:38

Exactly

Kent accountant wrote:

What's the point if the client doesn't have a separate business bank account.

 

No point at all. If a balance sheet is useful to a client, then prepare one. If not, what on earth is the point. You are acting for your client after all, not HMRC or some imaginary "best practice" idol.

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By andy.partridge
06th Apr 2012 12:22

Yes, usually

What is the point?

If the accounts have been prepared using basic double-entry principles the printing and inclusion of the balance sheet will take seconds, not minutes, not hours.

The point is confidence - for the accountant that the accounts have been prepared properly, for the client that the accountant knows what they are doing (because it looks technical and is often beyond their comprehension), and for the accountant, again, knowing that the client knows that the accountant knows what they are doing!

I am not joking. I think there are psychological advantages for both parties, but the practical usefulness is very limited.

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Replying to cheekychappy:
Me!
By nigelburge
06th Apr 2012 12:47

Nail - Head - Hit!!!!

andy.partridge wrote:

 I think there are psychological advantages for both parties, but the practical usefulness is very limited.

I agree that there is sometimes a psychological advantage for some clients although they are not many. The practical usefulness is as you say very limited for most clients. 

However if all it takes is a button press in VT to produce a balance sheet then it is worth doing. If however one is doing a truly incomplete records job from lots of very mixed use accounts (as I do) - it is just a waste of time for all concerned.

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By zebaa
06th Apr 2012 14:53

...just a waste...

For a sole trader without a separate bank account a balance sheet is a nonsense. Unless, of course you include the lot - house, chattels & livestock (maybe a dog?). As for the suggestion it projects confidence because it looks... er...sort of...complicated, words fail me. 

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By andy.partridge
06th Apr 2012 15:09

From another perspective

I haven't had a client ever say, 'please don't include that wretched balance sheet, it's not clever/I don't understand it, but if you insist on including it make sure you include my house, chattels and livestock'.

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Replying to Ruddles:
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By HUGH W DUNLOP
09th Apr 2012 19:41

balance sheet

Prepare a balance sheet to include my house, chattels and livestock!

Very dangerous; if a client goes bankrupt and owes the revenue, his house etc will be included in his assets. Most small traders do as advised by their local tax inspector, and claim an allowance for only that part of the house which they use for business. This part is then of so little value that, though strictly speaking the revenue could regard it as a business asset, it is hardly worth pursuing.

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Replying to johngroganjga:
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By Roland195
11th Apr 2012 10:59

Hold on a minute

HUGH W DUNLOP wrote:

Most small traders do as advised by their local tax inspector

I think our friend here might have stumbled across some sort of temporal anomaly like in that film "Frequency" only here he is posting his comments from the 1950's and they are now appearing on the t'interweb in 2012.

How spooky.

 

 

 

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Replying to ash428:
Me!
By nigelburge
11th Apr 2012 11:17

??????????????????

HUGH W DUNLOP wrote:

Most small traders do as advised by their local tax inspector

This has got to be one of the weirdest comments I have ever seen here on AWeb.

"Local Tax Inspectors" vanished years and years ago. Do you think he has a secret store of them stashed away that we can all use?!

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By HUGH W DUNLOP
06th Apr 2012 17:30

Balance sheets

Having prepared and filed accounts for self employed and small businesses, I wish to comment on the 2 issues.

Very few, if any, have a business bank account. The costs are prohibitive, and the amount of leaflets with which you are bombarded is unbelievable. Most of them offering expensive insurance; or business loans which are always withdrawn at the last minute, naturally after deduction of the bank fees in relation to this. Provided the clients paperwork is sufficient to distinguish business from personal bank transactions, an ordinary account is sufficient.

A balance sheet is not required for the self employed, and normally not for a small business.

Even when filing accounts HMR & C ask 'Do you have a balance sheet?'

Provided the accountant uses a spreadsheet, such as Excel, to record assets and depreciation for inclusion in the P & L account, provision of a balance sheet is an extra unwarranted expense.

For instance when a new car is depreciated according to HMR & C , can one ever expect to get the written down value? The moment a car leaves the showroom it can lose up to half of its value.

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Replying to Patricia McCartney:
Giraffe
By Luke
06th Apr 2012 18:24

Small businesses

HUGH W DUNLOP wrote:

A balance sheet is not required for the self employed, and normally not for a small business.

By 'small business', I assume you mean a small self employed business and not a small limited company??  Of course as we all know a balance sheet is required for a limited company.

With regard to self employed businesses, I usually produce a balance sheet as it is not too tricky to produce as Andy says, if the bookkeeping is right it almost falls out of VT.  There are however a few, and I can count them on one hand, clients for whom I do not produce a balance sheet.

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By HUGH W DUNLOP
06th Apr 2012 19:55

balance sheet

As a qualified member of the Institute of Chartered Secretaries and Administrators, and former company secretary to 3 companies with over £1million turnover, I am well aware of the Companies Act and the requirement to produce a balance sheet, and other documents, for limited companies, though the depth of this can vary according to company turnover. As a general rule I advise companies with less than £120k turnover not to incorporate, and up to £175k to think carefully about doing so. The cost of incorporation can far outweigh any supposed advantages. Almost three times NI contributions, filing costs, and obeying the C.A., to name a few. Normally, in my findings, small firms, or S/E who wish to incorporate are doing so on the advice of a man in the pub who told them to do so as 'if anything goes wrong you can just walk away from it'  WRONG!  Common barriers to this are ;malfeasance; acting contrary to the C.A.; failing to take proper notes of resolutions and meetings; wrongful trading, trading whilst knowingly insolvent; etc.                                                                                             Another, yet thankfully, rare case is where an accountant advises it as he can increase his fees for extra work and additional filing.

But I digress. I mean a small unincorporated business or a self employed person. Producing an accurate balance sheet is not as simple as stated. An accurate figure must be given for 'cost of sales' and for closing stock. In order to do this a physical stock must be taken. Would a small grocer with hundreds if not thousands, of lines agree to close his shop for a week every year while he counted and costed his stock? Or would he prefer to pay his accountant to do it for him? 

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By jaybee661
06th Apr 2012 20:23

@HUGH W DUNLOP
... what sort of profit level do you start advising incorporation then?

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By HUGH W DUNLOP
07th Apr 2012 01:03

Incorporation

Jaybee,

If you properly read my letter you will see I generally advise companies with a turnover of less than £120k not to incorporate, and up to £175k to seriously think about it. Above that level, it is up to the owners.

One additional cost for limited companies/ revenue stream for accountants in rare cases as above; as the limited company is regarded as an employer of the directors and staff, wages and salaries require to be processed.

Normally it is possible to tell whether a potential client is acting on the advice of a man in the pub; just as a good tax inspector has a nose for tax dodgers. 

 

 

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Replying to shaun king:
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By jaybee661
07th Apr 2012 07:00

@HUGH W DUNLOP

HUGH W DUNLOP wrote:

Jaybee,

If you properly read my letter you will see I generally advise companies with a turnover of less than £120k not to incorporate, and up to £175k to seriously think about it. Above that level, it is up to the owners.

One additional cost for limited companies/ revenue stream for accountants in rare cases as above; as the limited company is regarded as an employer of the directors and staff, wages and salaries require to be processed.

Normally it is possible to tell whether a potential client is acting on the advice of a man in the pub; just as a good tax inspector has a nose for tax dodgers. 

 

 

... with all due respect I don't need to 'properly' read your letter as I asked what PROFITS not turnover as this is a completely different issue with regard to any tax savings.

... also I was interested in your comment that a company pays 'almost three times NI contributions' and wondered where that came from?

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Replying to Euan MacLennan:
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By HUGH W DUNLOP
07th Apr 2012 20:19

NI contributions

A person who incorporates a company is regarded as an employee. The company therefore (for the year 2011--12) pays 13.8% NI on pay over £136 per week. The employee pays a further 12% on earnings over £139 per week. A total of 25.8% of earnings. As a self employed person the amount paid on profits after legitimate deductions, some of which are not available to employees, would be 9%. 'Profits' for a self employed person is not the same as 'wages' for an employee.

I am well aware that a payment of £2.50 per week is also due from the self employed, and for employees on over £42484 a further 2% is due, and self employed with Profits of over £42475 per annum  also pay further 2%. 

Facts are chiels that winna ding.

I assumed that a firm with a turnover of over £175k would probably be well run and organised and make reasonable profits.

By the way, were you aware that though not yet a criminal offence, Companies House may refuse to incorporate, or may strike off, any company set up with the sole intention of avoiding tax.

 

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Replying to SKCOX:
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By jaybee661
07th Apr 2012 21:24

... worrying...
... it's a bit worrying you're advising clients...

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By andy.partridge
07th Apr 2012 12:06

@ Hugh

Let me get this right. Are you saying that you would advise a sole trader with a turnover of £100k and a profit of, say £60k NOT to incorporate?

Please tell. I think I am going to learn something here.

Are business bank charges really prohibitive to any sole-trader? Mine are about £10/month

You suggest a retailer shouldn't prepare a balance sheet because they would have to close their shop for a week to do a stock take? If a retailer does not know the value of their stock (by whatever means), how will they know their cost of sales and how can you calculate an accurate profit (and tax) figure?

I note you are not an accountant so please don't think these are trick questions.

 

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Replying to JKnight:
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By HUGH W DUNLOP
07th Apr 2012 21:32

Incorporation

Andy,

Firstly I would say that with that profit margin the company is very well run, However it is, and has been for years, a general rule of any business hat costs are pared to the bone. there are additional costs involved in obeying the C.A., holding meetings, recording minutes, making returns to companies house. There is a charge for filing returns with CH. Have you ever paid to file a self assessment return?  (I hope I have not given HMR & C an idea to raise revenue by charging to file)

I have stated that Companies House is looking at companies which incorporate for the sole purpose of avoiding tax. A sole trader incorporating purely to take profits out at the dividend rate is doing precisely that.

I feel that if your personal turnover is £100k or even £50k you have done a very good deal with your bank. Banks charge for running a business account, charge for every withdrawal or deposit, and may soon charge for the air you breathe when you enter the bank. Please let us all know the name of your bank.

HMR & C allows small businesses/ self employed to submit their accounts on a cash basis (But run this past your local office first). So therefore an educated valuation of the closing stock is allowed. The true value will emerge when the owner sells the shop or retires. I will not even mention the third way. If anyone is of the opinion that they can manipulate their profits by manipulating their stock value, please think again. HMR & C have a database, built up over many years which they can use to predict the profits of almost any business in a particular trade, of any size within any area of Britain. If profits do not fall within an allowable range of those forecast, to quote the name of a film, 'The taxman comes calling' 

I do not regard these as trick questions. But I would advise you that I am a fully qualified and insured accountant, with my own practice, and am also an associate member of the Institute of Chartered Secretaries and Administrators, hence my previous positions of company secretary and knowledge of the intricacies of running a limited company.

 

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Replying to JSJ54:
Man of Kent
By Kent accountant
08th Apr 2012 10:28

PI Cover...

HUGH W DUNLOP wrote:

 

But I would advise you that I am a fully qualified and insured accountant, with my own practice, and am also an associate member of the Institute of Chartered Secretaries and Administrators, hence my previous positions of company secretary and knowledge of the intricacies of running a limited company.

 

...is a wonderful thing, for all those clients who later question the quality and accuracy of the service they have received.

 

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By ShirleyM
07th Apr 2012 12:36

I wondered the same thing Andy

A business can have a large turnover but very low profit margins, and vice versa. For tax purposes there is no benefit where profits are low. Additionally, an opening/closing stock figure is needed whether a balance sheet is produced or not. In any case, retailers are usually VAT registered with employees, and in these circumstances I prefer to prepare a full balance sheet so that the HMRC liabilities are clear.

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
07th Apr 2012 14:23

You should , but certain criteria and needs should be looked at.

Hi 

I prepare accounts for lot of small business as in Sole Traders.   There are some who do not have a business bank account ,but that is very rare.  Even if the bank will not give them a business bank account most will have opened a bank account and have only business going in and out. 

Not everyone wants to go Ltd . Believe it or not , there  are business men and women who have a moral issue with dividends (each to their Own belief ) I am not making a judgement but that is their choice.    I have a couple of clients that should be  Ltd for tax benefits but refuse to. Also there are lot of Sole traders do not like all the red tape required for Ltd Co . 

Not all sole traders are the same.   Some are bigger then others , so that does make a difference .

There are hundreds of Sole Traders in the UK that are willing to pay for bookkeeping and accountancy services.   I see no reason why they should except just a Profit and Loss.  I really do feel that some accountants do not see Sole traders as important as companies, and it shows in the presentation of the accounts.  Once you have done the double entry bookkeeping , it does not take long to run off a balance sheet.  I have many clients who left their accountant , because they felt they were not been taken seriously. 

Sole traders or just the same as business, they pay people to do services so they can get on with what they are good at. 

I do prepare a balance sheet because it looks more professional and clients can use them when  applying for an overdraft or for a grant and for management purposes .  

The Sole trader may also be growing and eventually want to go Ltd and good past records make it easier for you to get Finance.  If they grow , they tend to grow with you as well. 

I prepare management accounts for quite a few sole traders and this is also why I think you should prepare a balance sheet .

1) Some Sole traders do employ people so the keeping a control on PAYE and NI, Net Wages, CIS  is important.

2) Some Sole Traders do have debtors , Sole traders can be paid up to 30 days or even longer in the current climate.  Business or trying to stay alive. 

3) Some Sole traders do have creditors , they do not have to pay everything up front .  Many Businesses do give credit terms to sole traders once they build up a history with them. 

4) Bank account Balance.  Loan  Balances for Cars extra.  Sole Traders Assets. 

 

Kind Regards Sarah Douglas Douglas Accountancy and Bookkeeping Services 

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By ShirleyM
07th Apr 2012 20:43

lol - I understand now....

.... why you think they will pay more NI. It appears you advise that they extract profits via remuneration.

"Facts are chiels that winna ding."

I don't understand that part though!

 

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By Ayesha Bham
07th Apr 2012 22:18

HMRC and cash basis
"HMRC & C allow small businesses/ self employed to submit their accounts on a cash basis"

This is not correct at all. If this is correct where is the authority on this from HMRC - link please.

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By ShirleyM
07th Apr 2012 22:57

@Hugh W Dunlop

"Banks charge for running a business account, charge for every withdrawal or deposit, and may soon charge for the air you breathe when you enter the bank."

I will give you some very valuable information to help your clients. HSBC provide a free business bank account if the receipts/payments are made by electronic methods, but not if you bank a lot of cash, such as a retailer. I know this for fact, as we have one, so you can earn some brownie points from your clients by pointing them in that direction.

"I have stated that Companies House is looking at companies which incorporate for the sole purpose of avoiding tax. A sole trader incorporating purely to take profits out at the dividend rate is doing precisely that."

Thank you for telling me something I didn't know ......  I did not realise Companies House looked at companies to check that the share holders were paying enough tax!!!!! That is a new one on me! Where did you get this information?

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Replying to Locutus:
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By jaybee661
07th Apr 2012 23:06

... totally false...
... absolutely right Shirley, never heard such garbage!!!

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By alattax
08th Apr 2012 11:22

Tripe

I never much liked tripe as a food, let alone under the guise of informed comment.

Anyway back to balance sheets, if the client has a business bank account and other business assets I would usually have prepared the accounts in an accounts/bookkeeping program and the balance sheet will be automatic and makes sense to issue it as part of the final accounts 

Subcontractors and the like still normally arrive with a bag of petrol/tool/purchases/stationery receipts and a balance sheet would not be appropriate.

I never liked auditing when I trained, but I think you need something similar to an auditors eye to review the accounts as a whole including a balance sheet to be sure they make sense. Which is why in most cases balance sheets are prepared and are important.    

     

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David Winch
By David Winch
08th Apr 2012 11:29

Case study

Would you have prepared a Balance Sheet for 'Brian' in this case study?

Do you think that if Balance Sheets had been prepared for Brian the eventual outcome for him would have been any better?

David

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By ShirleyM
08th Apr 2012 11:54

@David .... maybe!

From an accountants point of view there are always cases where clients are in a real mess but cannot (or will not) pay for a 'proper job' be done. We can only advise of the risks, and we cannot force clients to do anything really. All we can do is refuse to act for them, and report them, if we think they are dodgy, as opposed to being irresponsible. We are also reliant on their honesty regarding existence of bank accounts.

Given that he was swapping money between accounts and didn't keep records of cash transactions, and he wasn't all that honest, I doubt anyone could have really helped him at that point because he was deliberately concealing quite a lot.

Some people have no morals and will always gamble and take risks, and it is only when HMRC & the police catch up with them that they see the value of good records  ..... for their defence against confiscation!

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By alattax
08th Apr 2012 13:10

Tax aside, complete/correct business and personal records would have helped whether or not they were turned into a profit and loss account or balance sheet at the time.

Had he been an [***] type he could well have purchased an accounts program and had accounting records which showed the watches as capital introduced in his personal balance sheet. How likely is that?

Obviously the normal balance sheet discussed on this thread only purports to reflect the business aspects and then only insofar as the information is available. Apart from drawings will not show personal assets/liabilities.

But Brian suffered because he couldn’t account for his assets and had also presumably dodged his tax obligations, combined with the fact that the police and prosecutors have no sense of reasonableness or reality. I imagine they are not obliged by law to do so.  

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By Sherman Holter
08th Apr 2012 13:55

No Bank Account

The statement that sole traders don't need a bank account might imply that a limited company does need one.  I have never believed this to be the case.

I have a client who has a very small business which trades through a limited company.  Neither the company or the client have a bank account.

Should I be worried about any implications?

 

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Jennifer Adams
By Jennifer Adams
08th Apr 2012 16:32

Final word? Again detailed in my article

May I add a final word here? Many 'Any Answers' queries are based around the question of whether to incorporate or not.

Now I know saving tax is not the only reason for incorporating (see my article on this subject)

https://www.accountingweb.co.uk/topic/tax/incorporation-why-bother/514243 

But I would submit Hugh's blanket 'less than £120k turnover not to incorporate, and up to £175k to think carefully about doing so. The cost of incorporation can far outweigh any supposed advantages' comment needs a response.

As my article states, Rebecca wrote an article last year for 'Tax Adviser' magasine wherein she pondered this question as at what level of profit incorporation should be considered (note the figures relate to 2011/2012).

(see http://www.tax.org.uk/Resources/CIOT/Documents/2011/06/Incorporation%20-%20Shifting%20sands.pdf)

From her figures I would have thought consideration at least should be at about £30K profit so the additional cost involved would produce some benefit for the client after the additional fees. In this month of 'not doing a lot'(!) I am making a schedule of which clients of mine reached the £30K profit limit last year with potentially higher profits this so to discuss incorporation.

PLUS>>>> my business has an HSBC business bank account with no bank charges so long as you dont deposit more than 5 cheques a month or deposit cash over the counter.

Jennifer Adams FCIS

Assistant Editor

PS for some reason there is some text shown below this line that I didnt write...I'll take it up with John when I speak to him on Tues... happy easter!

 

She showed Frpom

 

 

  commcomment  

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By thomas34
08th Apr 2012 16:50

Final, Final Word

This question has been done to death previously on AW and the OP probably regrets asking it. Those that do prepare balance sheets will always do so and won't be convinced that there is another way of doing the job. Those that never, or rarely, produce a balance sheet (like me) are likewise unlikely to suddenly add this task to the list of jobs to be done.

I do strongly suspect that the majority of those that do prepare one are using software which uses double entry bookkeeping principles. A balance sheet is the inevitable consequence of double entry.

The vast majority of my sole trader and partnership accounts are prepared on single entry principles and are no less accurate as a result. Out of the thousands of accounts using such principles that I've submitted via self-assessment and the many enquiries I've conducted, the lack of a balance sheet has never been an issue with HMRC.

The question of a business bank account is a red herring to the argument.

 

 

 

 

 

 

 

 

 

 

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David Winch
By David Winch
08th Apr 2012 17:02

Partnership accounts

I would have thought that, in relation to partnership accounts, it is absolutely vital to prepare a capital account for each partner.  The obvious way to include those capital accounts in the documents which go to the partners is by preparing a Balance Sheet and showing them within that.

It may also help to establish which assets belong to the partnership and which assets do not (although - in relation to land & buildings for example - the asset may be used for the partnership business whilst being owned personally by one of the partners).

This is not primarily to satisfy HMRC - it is to tell the partners what they need to know.

And, in case you are wondering, I do think that this is necessary in the case of husband and wife partnerships - deaths / divorces do happen you know!

David

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By petersaxton
08th Apr 2012 18:20

My view

I don't prepare balance sheets for sole traders

I do prepare balance sheets for partnerships and limited companies.

I think the reasons are obvious.

Hugh's views are very worrying. His comments are illogical. Why consider turnover? I prefer to avoid NICs if possible with small companies. Most small businesses incorporate to avoid tax and Companies House have no interest at all. Hugh please run your views past the Institute of Chartered Secretaries and Administrators. You may be surprised by what they say.

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By Southbankdelboy
10th Apr 2012 15:07

The OP referred to sole traders without business bank accounts.

Some posters say they do not prepare balance sheets even with a business bank account.

We have always prepared a balance sheet if a business bank account exists even for the smallest of clients but after reading some of the above posts now question if it is worthwhile? Clients generally don't care/understand them and want the job done at the lowest cost.

So should a balance sheet be prepared where a business account exists? Where bank charges, car insurance, road tax, changes in HP agreements  etc. exist clients often miss out entering these in the accounts books therefore squaring the bank picks these up.

 

 

 

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
08th Apr 2012 22:39

Balance sheet question

Hi 

My understanding of this question was whether or not to prepare a balance sheet for small business who or not Ltd.  I did not think it was a question about whether or not to become Ltd. 

So I am confused why thresholds for incorporating should be the Final word in relation to Jenny Question. 

I do not think it is about anyone been right or wrong about producing a balance sheet, or  about whether they do single entry or double entry.   I do agree it is easier to pull off the balance sheet  quickly if it has been done by double entry. 

This should be about your customers, and providing customer Service if they what it.  As mentioned above my customers want a balance sheet for the above reasons I gave as a management tool.  They have to pay for this service, if that is what they want.    If not. Then I do not provide it to them, even though I could easily. 

Most do , as they what to know their  Creditors, Debtors , Vat , PAYE position.   

There  are sole traders were all their clients are Vat registered , so they register even though they are below the threshold.  This saves them 20% on all their business expenses, if all your clients are actually vat register , why should you lose out.   So yes a balance sheet gives them a statement at a moment of time.  This can be extremely useful if they are receiving it on a monthly or qtrly basis.  Sometimes you have  to look at thresholds and make sure your clients or not losing out , for many various reasons. 

It is not just about compliance for the HMRC as I do agree for the sole trader . I have never come across the HMRC asking for it. 

I have though been asked for it for by sole traders when they are looking to get a grant, Loan or overdraft or maybe trying to grow their business for the future. 

Why not ask the client if they want a balance sheet and let them know the cost of that service for some accountants it might not be much. 

Its better that they say they do not want the balance sheet , then the client feeling disgruntled because they feel they have not been taken seriously as a sole trader. 

Kind Regards Sarah Douglas Douglas Accountancy and Bookkeeping Services Glasgow

 

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Replying to lionofludesch:
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By HUGH W DUNLOP
10th Apr 2012 20:42

VAT

Sorry, I don't quite get that about saving 20% on business expenses. It is my understanding that if you are not registered for VAT you can claim the entire cost of purchases including VAT.

By registering, you are simply adding further costs to your clients who may not be VAT registered.

Anyway, as  am having a meeting at my local tax office with my personal HMRC contact agent, as he calls himself, within the next 14 days, I am sure I will then be further equipped to answer that and several other questions

As I have said, I do have all the records available to give a balance sheet if required, but many clients do not want what they perceive as an additional cost. Many sole traders in Glasgow, as you should know being based in Glasgow, are there by virtue of circumstances, redundancy and unemployment, coupled with a desire to be employed and not reliant on unemployment benefits. Most are struggling to make a decent living, and cut costs to the bare minimum in every way, If required I can produce balance sheets for the purpose of bank loans or overdrafts, but why give the client additional expense every year, when it may be required only once.Many self employed people will not go to a bank for such purposes as they are well aware of the lending records of banks, particularly in regard to self employed, especially when starting up, and prefer to make other arrangements such as family and friends.

 

H.W. Dunlop. A.C.I.S., F.F.A., F.I.A.B. Chartered Secretary & Accountant. Glasgow

 

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Replying to cheekychappy:
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By Roland195
11th Apr 2012 10:01

You are doing what?

HUGH W DUNLOP wrote:

Anyway, as  am having a meeting at my local tax office with my personal HMRC contact agent, as he calls himself, within the next 14 days, I am sure I will then be further equipped to answer that and several other questions

H.W. Dunlop. A.C.I.S., F.F.A., F.I.A.B. Chartered Secretary & Accountant. Glasgow

 

You do realise that this meeting will be to discuss the actual mechanics of filing tax returns etc and not the content?

 

 

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Replying to Duggimon:
Me!
By nigelburge
11th Apr 2012 10:14

Mind-boggling

Roland195 wrote:

HUGH W DUNLOP wrote:

Anyway, as  am having a meeting at my local tax office with my personal HMRC contact agent, as he calls himself, within the next 14 days, I am sure I will then be further equipped to answer that and several other questions

H.W. Dunlop. A.C.I.S., F.F.A., F.I.A.B. Chartered Secretary & Accountant. Glasgow

You do realise that this meeting will be to discuss the actual mechanics of filing tax returns etc and not the content?

 

It is amazing how threads like this can morph from a sensible question into something quite mind-boggling.

I can't wait for the next instalment.

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By zebaa
09th Apr 2012 22:21

@Hugh

My comment was intended as a minor joke. As we were talking about a sole trader, if he goes bankrupt, it will include his house & other assets. Limited liability is a good reason to incorperate, but then ownership of, say, a house, does not change, and remains with the person.

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By petersaxton
10th Apr 2012 02:53

Hugh

If a self employed person goes bankrupt their house is at risk.

If a business is run through a limited company then the house is not at risk unless the company owns it.

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By HUGH W DUNLOP
10th Apr 2012 20:02

company ownership of house

If a company director is guilty of malfeasance then the cloak of limited liability is lifted, is it not.

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By petersaxton
10th Apr 2012 20:18

Who is interested?

When's the last time you have seen any action taken?

 

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Replying to scalloway:
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By HUGH W DUNLOP
11th Apr 2012 20:10

Action

It is still the law!

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By johnjenkins
10th Apr 2012 21:14

This is the

beauty of being an Accountant. Diverse thinking according to all sorts of fundementals. An Accountant worth their salt will weigh up the situation and act accordingly. There is no right or wrong, just figures that give meanings to those that want them to.

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By cfield
10th Apr 2012 23:29

Missing the point about Balance Sheets

Most of the posts so far miss the point about balance sheets for sole traders in the sense that the most relevant issue is to keep a record of how you calculated stock, depreciation, debtors, creditors, accruals and prepayments. Otherwise, how can you establish the opening balances for the next year?

If you have all that information then a balance sheet will produce itself. However, some of the items may be estimated or incomplete, in which case a balance sheet could be potentially misleading. Unless the client particularly wants one, it is best not to bother.

Why make a rod for your own back by producing a balance sheet which could contain errors due to poor book-keeping and/or withheld information?

Better to simply adjust the P&L for the following year if, for example, there were debtors you didn't know about, rather than have to correct a balance sheet, which could be a reflection on your own competence even if it was through no fault of your own.

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
11th Apr 2012 09:21

vat registered

Hi

  I am not adding an extra expenses to client unless they want that extra service.

  There are also many self employed and sole traders who keep very accurate books in most cases better than I have seen some Ltd companies keep. So it very easy to produce an accurate balance sheet. 

There are plenty of sole traders running some very good businesses in Glasgow who are vat registered and can afford good accountancy and bookkeeping fees.

Hugh the reasons you give for anyone running a business or exactly the same in Glasgow as anywhere in the UK so I will have to agree to differ on some of points raised about business in Glasgow.  The climate is hard in the whole of the UK.   If People want to pay for good customer service and extra reports .It is their choice. There is no shortage of people purchasing in the Apple store in Glasgow which provides excellent customer service .  For example there are many reasons (been a female) why I would prefer to pay extra in the Apple store then go to PC world.  I know ,but that is my choice.

My point about the vat is you need to take everything  into consideration.  If all your clients are vat registered and even if a few small ones are not ,  then why would you stay unregistered for vat, when you could be saving considerable amounts . I agree not 20% I should of made myself clearer.  If  a large percentage of your sales or to other vat register customers then of course you will make a saving.    If you take a purchase of £100 before vat.  If you are vat registered you make £20 more profit and pay a percentage of that in tax.  If you are not vat registered you lose the whole £20.00. This applies whether Ltd or a sole trader.

Everyone business can vary .   Of course if the majority of yours sales where to customers who were not vat registered then you would not consider it. You must take everything into consideration, including profits.

I have quite a few clients that have got grants and loans from banks in Scotland this year. 

In relation to receiving loans from family and friends is best avoided if possible .  90%of the time it ends in a argument or family falling out.

Rightly or wrongly there are some business who prefer their suppliers to be vat registered . I have also come across this many times.

 

Edited re spelling mistakes

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By Steve Holloway
11th Apr 2012 08:04

'Chartered Secretary & Accountant'

That my friend is dangerously close to misleading your potential clients. God forbid anyone might think you are a Chartered Secretary and a Chartered Accountant. Actually, given the grasp of everyday tax planning you have demonstrated in this thread I think you really ought not to include 'accountant' in the title at all. I thought you were a spoof poster to be honest but I see Linkedin suggests otherwise.

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