I am quite surprised to read some of the comments above.
I have understood for many years that ensuring "wife's" wages are valid deductible expenses entails evidencing them as such, both by ensuring that there are records of some sort of actual work done, AND putting them through a payroll - deductions or not.
I don't see that it is ok for employers to make assumptions about employees' tax statuses. Even though one might well know that an other half does not have any other job, or will pay any tax due via self assessment, or whatever, we all well know that the vagaries of the PAYE world can lead to unexpected and/or wrong PAYE codes which nevertheless the employer has to implement on pain of penalties for failure.
And if the P46 rules lead to no notification of employment to HMRC and/or no preparation of a P11, it seems to me better to have a payroll in place so the tools are there to work with.
For those who just cannot manage 'proper' book keeping systems..
I set up a very simple 'list' spreadsheet template a while ago, basically just to record bank transactions and aiming to mirror the bank account. Half a dozen columns or so, no analysis columns necessay. Some clients have found this incredibly useful, and I have also found the format surprisingly useful in the accounts compilation stages.
I used to use CCH's model engagement letters but gave up on them because in parts they used to be so poorly written and incoherent. I now use ICAEW model, but (1) terms & conditions modified in particular because the model did not cater for charging on outsourced/expert work and (2) I have reorganised the letters into what I believe is a much clearer format (though the words are much the same).
ICAEW told me a while ago now that the only item which is really mandatory in an engagement letter is the complaints procedure. Also, I think engagement letters are crying out for somebody to programme Word to compile engagement letters from standard paragraphs picked on the basis of a tailoring questionnaire... Would have a go myself but know too little about macros these days! I do know some firms simply ignore the models available and go for something much simpler. Trouble is, I see the engagement letter as essential to communicating what falls within and what does not fall within an FPA.
If anyone does know of an efficient and effective engagement letter system I would be really interested in knowing!
What a massive shame! I have not used Iris but I have heard little good about it. I agree with all sentiments so far expreseed - having been a very satisfied customer both of PTP software and of PTaP for many years.
Would Iris, perhaps, come on line to share with us their strategy as far as the future of PTP Software is concerned? Please?
Really think you are heading for trouble Largely I agree with Chris. You really need to get enough knowledge of accounting and tax, or buy it, to be able to complete your tax return correctly. I dare say you have some equipment, vehicle etc? If so, are you able to account for depreciation and/or claim capital allowannces? If you do have a loss, which you may or may not have, do you know how to claim set off against other income in the same or other years?
If you complete your return incorrectly, the Revenue may not pick this up. If they do later on, they may go back 6 years from that point and correct errors. This situation is not to be recommended.
You could always get the Revenue to help you themselves. They will not charge you.
Another alternative system.. I agree that TAS is FAR more appropriate for the smaller end of the market than Sage. I also very much agree that we accountants can provide very good value for the money we charge.
Just so you know, we have just started providing our clients, if they want it, with FREE, simple book keeping software, much simpler than Sage or TAS, but effective for the simple business. It looks and feels much like manual books or a spreadsheet, but it is safer, more organised, imposes the necessary discipline and has a lot of built-in video/audio training, demonstration and help. Does that kind of system sound of interest?
Software and accounting Just to support John Mackay's comments about software, Sage is ok if operated by an "expert" in real time but otherwise can become messy and expensive to sort out. It is also very expensive for the quality of underlying software. As an accountant, I always regret having to deal with books kept on Sage! Money Manager is a super, well thought out system, a bit quirky but it does a great deal. Support is also very readily accessible. It is spreadsheet-based, so you have to be careful to save regularly while using it. However, (I cannot remember for sure, but I think) it is relatively easy inadvertently to change old transactions which have been reconciled to bank statements or used for past VAT returns - if this is the case care is required. For a mid-way system that looks after you but is good and flexible I would suggest TAS Books v.2. I have used this for years for myself and for clients. TAS now belongs to Sage but they appear to be continuing to support, develop and market it. It is much less expensive than Sage. Oh, by the way, dummy bank accounts is what I do too, particularly if cash accounting for VAT. Where I have paid a business expense from my back pocket, I put the invoice into the books as normal, then pay it from the dummy account, then put in an equal and opposite bank receipt (outside the scope of VAT), debiting the dummy account (which then has a balance of zero) and crediting capital introduced or drawings. (I think of paying for things out of your own pocket more as a negative drawing thas as capital introduced.) Good luck anyway!
My answers
"Wife's" wages
I am quite surprised to read some of the comments above.
I have understood for many years that ensuring "wife's" wages are valid deductible expenses entails evidencing them as such, both by ensuring that there are records of some sort of actual work done, AND putting them through a payroll - deductions or not.
I don't see that it is ok for employers to make assumptions about employees' tax statuses. Even though one might well know that an other half does not have any other job, or will pay any tax due via self assessment, or whatever, we all well know that the vagaries of the PAYE world can lead to unexpected and/or wrong PAYE codes which nevertheless the employer has to implement on pain of penalties for failure.
And if the P46 rules lead to no notification of employment to HMRC and/or no preparation of a P11, it seems to me better to have a payroll in place so the tools are there to work with.
For those who just cannot manage 'proper' book keeping systems..
I set up a very simple 'list' spreadsheet template a while ago, basically just to record bank transactions and aiming to mirror the bank account. Half a dozen columns or so, no analysis columns necessay. Some clients have found this incredibly useful, and I have also found the format surprisingly useful in the accounts compilation stages.
Thank you very much, I have had a look and have passed this on.
John
A hobbyhorse of mine too!
Paul,
I used to use CCH's model engagement letters but gave up on them because in parts they used to be so poorly written and incoherent. I now use ICAEW model, but (1) terms & conditions modified in particular because the model did not cater for charging on outsourced/expert work and (2) I have reorganised the letters into what I believe is a much clearer format (though the words are much the same).
ICAEW told me a while ago now that the only item which is really mandatory in an engagement letter is the complaints procedure. Also, I think engagement letters are crying out for somebody to programme Word to compile engagement letters from standard paragraphs picked on the basis of a tailoring questionnaire... Would have a go myself but know too little about macros these days! I do know some firms simply ignore the models available and go for something much simpler. Trouble is, I see the engagement letter as essential to communicating what falls within and what does not fall within an FPA.
If anyone does know of an efficient and effective engagement letter system I would be really interested in knowing!
PTP
works very well and is very well supported
What a massive shame!
I have not used Iris but I have heard little good about it. I agree with all sentiments so far expreseed - having been a very satisfied customer both of PTP software and of PTaP for many years.
Would Iris, perhaps, come on line to share with us their strategy as far as the future of PTP Software is concerned? Please?
Really think you are heading for trouble
Largely I agree with Chris. You really need to get enough knowledge of accounting and tax, or buy it, to be able to complete your tax return correctly. I dare say you have some equipment, vehicle etc? If so, are you able to account for depreciation and/or claim capital allowannces? If you do have a loss, which you may or may not have, do you know how to claim set off against other income in the same or other years?
If you complete your return incorrectly, the Revenue may not pick this up. If they do later on, they may go back 6 years from that point and correct errors. This situation is not to be recommended.
You could always get the Revenue to help you themselves. They will not charge you.
Good luck anyway.
Another alternative system..
I agree that TAS is FAR more appropriate for the smaller end of the market than Sage. I also very much agree that we accountants can provide very good value for the money we charge.
Just so you know, we have just started providing our clients, if they want it, with FREE, simple book keeping software, much simpler than Sage or TAS, but effective for the simple business. It looks and feels much like manual books or a spreadsheet, but it is safer, more organised, imposes the necessary discipline and has a lot of built-in video/audio training, demonstration and help. Does that kind of system sound of interest?
Software and accounting
Just to support John Mackay's comments about software, Sage is ok if operated by an "expert" in real time but otherwise can become messy and expensive to sort out. It is also very expensive for the quality of underlying software. As an accountant, I always regret having to deal with books kept on Sage!
Money Manager is a super, well thought out system, a bit quirky but it does a great deal. Support is also very readily accessible. It is spreadsheet-based, so you have to be careful to save regularly while using it. However, (I cannot remember for sure, but I think) it is relatively easy inadvertently to change old transactions which have been reconciled to bank statements or used for past VAT returns - if this is the case care is required.
For a mid-way system that looks after you but is good and flexible I would suggest TAS Books v.2. I have used this for years for myself and for clients. TAS now belongs to Sage but they appear to be continuing to support, develop and market it. It is much less expensive than Sage.
Oh, by the way, dummy bank accounts is what I do too, particularly if cash accounting for VAT. Where I have paid a business expense from my back pocket, I put the invoice into the books as normal, then pay it from the dummy account, then put in an equal and opposite bank receipt (outside the scope of VAT), debiting the dummy account (which then has a balance of zero) and crediting capital introduced or drawings. (I think of paying for things out of your own pocket more as a negative drawing thas as capital introduced.)
Good luck anyway!