Starting a new business

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Hi,

A friend has asked for advice while in the process of starting a new business, to keep his costs down. Before my involvement the friend setup a ltd company and started trading. He's making cabinets, he's purchased wood, produced a few and sold a few making a nice profit.

I thought he could run the accounts on a cash basis, but now understanding his trading a  ltd company and not vat reg I believe this not to be possible now. I understand you can't work on a cash basis but must employ the traditional accounting methods of double entry and on an accruals basis, is this correct?

If so, would you recommend we apply the traditional methods and trade as a ltd, or leave the company dormat and trade as a sole trader on the cash basis method?

Also if he was to trade as a ltd company, does anybody know of any good excel spreadsheet templates to use for the double entry accounts or is his best option just to use a cheap software application, again he's looking to keep costs at a minimum while he tests the market.

Regards

 

 

 

 

 

 

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