Hi everyone,
First of all I do apologies if I write any silly questions.
I have recently joined in a small company (VAT registered) and I am the only person to do all book-keeping and accounts. Having few Sage 50 bookish knowledge now I am struggling to perform my work and really confused whether I am doing right or wrong. Can anyone please help me the following queries -
1. Its a small company and we deal with student admission in Universities. So everyday lots of student and universities people visit us and we normally buy food, drinks or chocolate for them. So I am recording those invoices (tesco,asda) as 8205(refreshment) nominal code. Well I think these kind of expenses directly help to increase our sales. So is it the right one I am using now or I am doing something wrong. Now I can see in my P&L general expenses are more than £2000 and I believe it will be more over the year end. If is it wrong then can I edit it from maintenance tab as I have already reconciled one month. I have to reconcile rest 11 months.
2. What would be the tax code (T9 or T0) for rents and rates please?
3.The owner gave me the bank statements and few invoices . So my question is if go thourgh the bank statement only and enter them as Bank payments & Bank receipts then would I be able to prepare VAT return then? I can see some transactions in the bank but I do not hold any invoices for that so can I still record them in sage with VAT??
I would be eagerly wiating for kind response from anyone.
Thanks in advance
Mustak
Replies (37)
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My thoughts
1. How does it compare with last year?
2. T9 unless the rent has VAT on it
3. You can only claim VAT where you have a valid VAT invoice.
Consistency is what matters
Best thing is to look back at how the previous person entered the transactions, and then just copy how they did it. When you're more competent, you can start to change things around if necessary, but for a novice, the only way is to copy.
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Agree with Scalloway points 1&3 - I usually put rent to T0 as I thought it was 0% not outside the scope (the difference in the two codes is that T0 is still included within your VAT return, T9 is excluded).
Do you have an external accountant? They might be able to help you with where the transactions are/have been posted.
Previous years books?
1. Do you have access to the previous years books? You may find a clue in there.
2. Do you use Sage payroll? That will do the entries to put through the wages creditor. You can then use 2220 for the payment of wages. If you use other software you will need to decide how best to bring in wages.
Agree
with Scalloway. If you can't find the previous treatment then continue the treatment you have adopted (it's better to be consistent).
With regards to the wages posting to 2220 is the correct treatment but you are missing a step and that's why you need to see the payroll information as Scalloway says.
Be consistent
Can you not ask the accountant for some guidance ? And the missing payroll records?
Anything you don't have a voucher for post as a bank payment.
I post VAT paid as a bank payment, code T9. Sage should have a code for VAT liability.
Unhelpful accountant...
My accountant - He seems like dont want to help at all. I dont know why.
You are working for a boss that seems to have no historical books, has lost most of the information that your accountant has sent him, and has no invoices for many of his bank transactions, and on top of that, has just opted to start using Sage, possibly without (or in spite of) any input from the accountant.
It's possible that his accountant may be slightly fed up with your company...!
Answers
From memory it is 2202
It dosn't matter if your customers are VAT exempt, they pay VAT like everyone else. They're just not able to reclaim VAT you charge.
I second James Reeves comments. I would find it a struggle to sort out the problems you face.
You need to take advice re the VAT
You can't cancel the VAT on your service if it is genuinely a VATable service. Whether the customer is VAT registered or not (or exempt) is irrelevant. Please take advice on whether the service you provide is VATable (some educational services are exempt) and if it is you have to charge VAT.
The previous accountants should give you an indication of where the expenses were posted last year - you need to compare the costs in each expense category.
Course Needed
I would suggest that you ask your employer to send you on a Sage Course (you can do these on-line I believe, or go to a centre). As your knowledge seems too limited to be able to succeed with your current job. I believe you will just dig a deeper hole for yourself and your employer each week. As you need to have knowledge of not just double entry book keeping, but also how the VAT system works and what items are vatable, what are zero rated and what are exempt. From what you say, I don't think you are very sure footed on any of this at the moment. It must be causing you a lot of stress and worry.
Agree with Carolynne
I think this will be the best thing and will make you a lot more comfortable in what you are doing. The VAT situation is really important IMO, you need to know when you should charge VAT.
EDIT - crossed with your post. As I said the question is whether your service is VATable. If it is, you have to charge VAT.
If your service is VATable
then you must charge VAT on your services. As far as I am aware (and I'm not a VAT expert) the status of your customer is irrelevant. You can't use T9 as this would understate your VAT liability. You say that your accountant prepares your VAT returns, has he not raised this issue with you?
VAT
Have a look at VAT Notice 701/30:
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.por...
Without precise details of the service you provide and the type of business you are, it is difficult to determine regarding the "exempt" question. I suspect you will still have to charge VAT, though.
However as others have said, the VAT question is the sort that would normally be referred to your external accountant if there is any doubt.
Impossible
This is my question. I have no contact with our accountant and all he does, he ask the bank statement every three months and prepare VAT return and account end of the year. I do not how does he prepare that with only bank statements ??!! Is it possible to do that with only bank statements?? If it is then why I am spending times entering invoices and reconciling bank statements!!
Please help
It is impossible for us to know how the accountant prepares the accounts. You have had a lot of very good advice, but surely you need to communicate with the accountant? That relationship is vital for you to do your job well and for the accountant to do their job efficiently, and for your employer to get value for money from you both. What is stopping you?
I second Andy's view.
From your last post it would appear that both you and the accountant are doing the same job in different ways. You need to speak to him sooner rather than later to sort this out. If you have no contact with him then you need to raise this with your manager/boss.
Vat query
Just to reiterate. If your service provided is a Vatable service, it doesn't matter if the customer is VAT exempt. To give an example, if this vat exempt customer goes to a stationery shop to buy paper for their photocopier, do you think the stationery shop knocks off the VAT element of the sale for them. They do not. And if your service is chargeable to VAT, then you should be billing them VAT. In this instance, anyone you have reduced your invoice to reflect no VAT charged (for a vatable service), will mean that you have to pay VAT within the figure you have received over to HMRC, treating the amount now received as the Gross of VAT figure (cutting into your profits). Unless you can re-invoice them the VAT element again, and explain that they have to pay the VAT element on top of what they have already paid. But as others have said, only your accountant can confirm all of this to you, as he knows you business, we do not. And you should not really act on information from me without checking it out. As I do not know the full picture.
No
Thank you everyone for your kind advices. I will speak to my boss and try to communicate with accountant.
I have one last question - We are VAT registered. So whatever would be the sales every three months we have to pay 20% VAT on that sales whether we charge customer VAT or not,yes??
Thanks
But speak to the accountant who is in the best position to advise you on your particular circumstances in detail. The accountant knows your company well. We don't.
Vat on all Vatable Sales even if you didn't put VAT on the inv
As mentioned in my early reply, even if you have not charged VAT on an invoice, if the service was vatable, you have to suffer paying VAT over on the amount you charged without putting vat on. EG if your original invoice was £100 plus £20 VAT, and you were asked to remove the vat and instead charged them £100. You would then have to do a sum to work out the element of the £100 you owe HMRC for vat on that sale. £100 divided by 120 multiplied by 20 will give you the vat element of £16.67, your net element then becomes £83.33. By taking off the VAT element of an invoice that should have vat on it is therefore costing your employer £16.67 of his sale price in this example.Thank you everyone for your kind advices. I will speak to my boss and try to communicate with accountant.
I have one last question - We are VAT registered. So whatever would be the sales every three months we have to pay 20% VAT on that sales whether we charge customer VAT or not,yes??
Thanks
You charge the customer VAT
If you provide a VATable service you charge the customer VAT, regardless of whether they are VAT registered. If the customer says they should not pay VAT you need to determine why not. There are services that are VAT exempt.
You pay 20% VAT on sales that have VAT on them if you are VAT registered. You don't pay VAT on sales that are exempt.
Nothing wrong
First of all Thanks a lot for all your advises and help.
I am trying to record director salary and staff wages.All I am doing now from bank statement I am posting the wages for every month(from last year) as a Bank Payment to 2220(net wages) nominal code because I do not have any paysilips or payment summery to post it from journal. . I have also requested the owner to ask accountant to give me payment summery from last year so I can do it from journal.
My question is if I carry on now as Bank Payment until I get the payment summery would be it showing anything wrong later on in SAGE when I post the payment summery from journal (Think that time I do not have pay net wages from bank as I have already done it. Only record from journal the total breakdown such as gross,net,employers NIC,employees NIC) ??
Thanks
You are doing nothing wrong, but without the journals Sage will not produce any meaningful profit information. If your director asks you for a profit and loss account the profit will be overstated because you will not be showing any wages in it.