he said “a laptop and a file”

he said “a laptop and a file”

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Hi all got a query needing answering if you could spare a couple of minutes.

Recently a friend of the family came to me and asked if I could take a look at his accounts to make sure they are all in order, essentially be his bookkeeper/accountant which I have no problem doing in my spare time, the problem is that I have never touched a small business’ accounts before I don’t know what to expect. Feels like I’ll be going from a well-oiled machine to a place filled with receipts and bills laid across everywhere, I mean I don’t want to turn up and say “well I don’t know” then sit in the corner crying for half an hour.

I am AAT qualified, have been for a few years and am studying towards a CIPFA, I have worked for a local authority for several years knowing all the things needed i.e. Creditors, Debtors, VAT etc.

Can anyone give any advice on the matter who has done this before, am I being stupid it’s not as daunting as I’m making out (sure there will be problems that I have to query) or is this a big no-no area and there are procedures that I need to think of?

When I asked him what kind of filing/financial system he kept he said “a laptop and a file”…..fantastic.

Replies (12)

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By andy.partridge
28th Jan 2014 12:28

Back to basics

You will need see if the file identifies the basic transactions:

1. Sales

2. Purchases

3. Sales receipts

4. Purchase payments

5. Other receipts and other payments so that 3-5 enables you to reconcile the bank

If you have those basics you will be able to draft a set of accounts. You can take it to a higher level with accruals and prepayments and balance sheet reconciliations later eg. VAT, PAYE when you know you have the building blocks in 1-5.

 

Thanks (1)
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By MBK
28th Jan 2014 12:32

My advice is to be very careful

Acting for a small business (particularly keeping tax to the legal minimum) requires experience and training for that specific purpose. AAT alone won't get you there, and it sounds like your "day job" won't give you the experience you need.

There is thus a danger that, by trying to be helpful and with the best of intentions, you may inadvertently create a situation which will end in tears.

The best help you may be able to give the friend is to suggest he goes to a decent quality local accountant.

Thanks (2)
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By neileg
28th Jan 2014 12:37

I agree

Working in a local authority (as I do now) gives you virtually no skills or experience you can apply to incomplete records.

I think you already identified the problem and you may well end up saying "I don't know" though the crying in the corner is optional.

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Replying to CherryBlossom:
Red Leader
By Red Leader
28th Jan 2014 12:52

advice

"What can I put through for use of home as office / mobile phone / travel costs?"

"Should I incorporate/disincorporate?"

"Is it better to buy my car/van on HP or lease it?"

"What depreciation can I claim on my new laptop? Is it different for tax purposes?"

"When can I write off a bad debt? for VAT? for income/corporation tax?"

And so on.

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By The Limey
28th Jan 2014 17:16

Am I really the first person to mention the dreaded words 'practicing certificate'? One is required (as a condition of AAT membership) if you engage in public practice - which is what this is. You would also require professional indemnity insurance as well. You need to question whether it is worth it.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
28th Jan 2014 19:43

If you are a MAAT then yes as the Limey says you will need to see about the members in practice scheme. It might not be worth it.

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By jesims
29th Jan 2014 11:02

Hmmmm

Hi all

Thanks for your responses (didn’t expect so many if I’m honest). I did have a look on the AAT website after I posted the question and there are certain conditions to become an AAT 'Member in Practice' (MIP), it just strikes me as all a bit complex, though I can understand the legal side of it if it all goes '[***] up'.

But MBK and Neileg, if AAT doesn't get you there how do people initially take the plunge, when I was studying a couple of students took the AAT simply for the MIP (though I don’t know what they are doing now) as they wanted to work for themselves. I mean it can’t be that hard like a catch 22 - you can’t look at a S/B accounts until you got experience....but you can’t get experience until you look at a S/B accounts. So where do you get the experience in the first place? Working for a small accounting firm? Sorry if this seems all a bit daft but all I’ve even known is Local Authority, and it kind of annoys me that people who don’t know Accountants (and think of us as pure number crunchers,) turn round to me ask me to look at their accounts and I say sorry not that kind of accountant to which I’m confronted with a very blank face with the words "so you’re an accountant that can’t look at my books?" (I'd like to take this moment to say that I am still an Accountant in training but saying that to people opens up a whole new very dull conversation).

I think I might have a look at his documents see if they are all in order, maybe look at his filing system and give some very limited advice but at the end of the day point him in the direction of an Accountant more experienced in this area (which is quite annoying).

 

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Replying to andrew1211:
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By Ken Howard
29th Jan 2014 12:20

Why would it be annoying?

jesims wrote:
I say sorry not that kind of accountant to which I’m confronted with a very blank face with the words "so you’re an accountant that can’t look at my books?" -------  point him in the direction of an Accountant more experienced in this area (which is quite annoying).

I don't understand your point.

"Accountant" is a very broad term and no-one could be expected to know much beyond their own sphere of knowledge and experience.  Look at it from another angle - I'd have no choice but to say "I'm not that kind of accountant" if someone came to me requiring Local Authority accounting services, or accounts/tax for a Multinational Global Trading Group, or for a charity.  It's fairly unrealistic to expect someone to know enough about all areas of accountancy isn't it?

From the top of my head, we have auditing, management accounting, public sector accounting, financial accounting, liquidation & insolvency, treasury accounting, charity accounting, actuarial accounting, etc etc.  Each of which is a profession in it's own right, but an "accountant" may be found in any of these.

Small business accounting and tax is just as much as specialism as auditing PLC's.  It sounds to me as if you somehow think that small business accounting/tax is lowly skilled if you think anyone can do it just because they've studied some of the basics!

I only have a small practice (under 100 clients), but I've got 7 of those who are qualified accountants who don't do their own accounts/tax as they know it's outside their area of expertise.  I've been in practice 30 years, but still have to turn away some clients who require a different skill set than I can offer.  I can assure you that I'm never met with a blank face and the words "so you're an accountant....." as you seem to think will happen.  Potential clients seem happy that I'm honest enough to know when I'm not the right person for them and even happier when I can point them in the right direction.  

 

 

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Replying to andrew1211:
Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
29th Jan 2014 15:28

AAT MIP

jesims wrote:
 if AAT doesn't get you there how do people initially take the plunge, when I was studying a couple of students took the AAT simply for the MIP (though I don’t know what they are doing now) as they wanted to work for themselves. I mean it can’t be that hard like a catch 22 - you can’t look at a S/B accounts until you got experience....but you can’t get experience until you look at a S/B accounts. So where do you get the experience in the first place? 

 

I got all my experience on the back of mentored self employment and applied for my MIP at the same time as my MAAT. There are 2 new scales of MIP for AAT - one is licenced, one is registered. The latter is like a "provisional licence" and is designed for those who lack enough experience, but have the support there to be able to act competently, with a view to becoming fully licenced in a year or 2.

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By andy.partridge
29th Jan 2014 11:55

Don't be afraid to say your not that kind of accountant. It shouldn't demean you in any way, it's just that there is confusion and ignorance out there.

If I'm met with a blank look when I say that something is not my area, I liken it to someone expecting their GP to perform open-heart surgery.

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By Alexdon
29th Jan 2014 12:57

Types of accountant

ken Howard - you missed out Turf Accountant! A good indication of how wide the term accountant is.

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By neileg
29th Jan 2014 14:54

@jessims

It's not that hard learning to do small business accounts, people can pick up the essentials in a couple of years.

The problem you face is that you need to get that kind of knowledge instantly with nobody to support you.

When I came into a local authority from the private sector I had a similarly steep learning curve but I had a lot of helpful people around me and I had been employed because of my private sector experience that the council bred accountants didn't have.

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