I have:
Dr Corporation tax (P&L)
Cr Corporation tax creditor (BS)
However, shareholder funds exceed net assets by the tax liability. Is there an obvious reason for this?
I'm not an accountant/bookkeeper, this is my own small business.
Thanks for your help.
William
Replies (14)
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I'm not an accountant/bookkeeper, this is my own small business.
There's your problem then!
Someone may have a clue but I'm not sure anything immediately occurs to me without being able to see the whole picture.
Do you operate a manual accounting system or computerised?
Accrual
I'm guessing that somehow the liability is in there twice. Maybe once in Accruals and again in Corporation Tax Due.
Impossible to say, of course, without looking at your detailed workings.
Is your software/spreadsheet or whatever not picking up the CT charge in the P&L as a deduction to the current year's earnings when it is being pulled through to the balance sheet?
Accounts don't balance?
Has to be something wrong with your software.
Even if the accounts are wrong, they should balance.
My guess is that retained profits c/f in the balance sheet is the b/f figure plus the profit before tax. Should be the profit after tax.
Are you able to remove all the entries for corporation tax this year - or reverse them out with same original dates and amounts used.
Then see if the accounts balance without the corporation tax included.
If you have balanced accounts without corporation without tax inlcuded - you know the issue relates to the corporation tax - if not you know ir relates to something completely different.
If differences goes away whjn you remove corp tax it should be fairly easy to then see where it has gone wrong when you put back in by comparing to the figures without corp tax.
changes should be
Current liabilities corp tax or other tax es increase by amount of corp tax
Retained profit this year decreases by amount of corp tax
if you were using manual system i might guess pre corp tax profit was being pulled through to the profit and loss calcs for the year that flow through to closing retained profits. If its double entry system this shouldnt happen - although you shoulkd check your chart of acounts to see if the corpation tax liability is being excluded from the acocunts produced - eg sage 50 has check facility that flags up missing chart of accounts categories - you have to go into chart of acounts and run the check though.
May the force be with you
I would say its your choice - doesnt need to be local but there are some advantages with having a real live person you can meet up with. I think you will find most accounts are pretty comfortable dealing competely remotely as long as they get necessary info - being honest they are possible happier to do everything by phone and email if client is similarly happy.