Query on experience and books

ADAMBURSE1

Hi there,I have a query, I have recently taken on a work colleagues books for his side business to gain experience. I think I have done the transactions right but as it's my first time doing it I will give a general overrun.....

As no seperate bank account just personal any payments have been made I have done as Cr Capital Introduced DR whatever (carriage outwards for example).

On PayPal a couple were transfers from bank account taken directly by PayPal seller so I done Cr Cap introduced Dr PayPal straight away and then Cr PayPal Dr supplier etc

What I have is expenses being, carriage inwards, carriage outwards, stationary and PayPal fees. As well as under cost of sales inventory purchases for input vat and sales obviously under output vat does that sound correct?

Also I have been advised by my brother in law it's best to get insurance even if on a cost neutral basis.. So do I need professional indemnity or personal indemnity?

David Ballantyne

Hello Adam,

What level of qualification do you have with the AAT? If you are level 3 or 4 qualified you will need an AAT practising license if you are offering services for money. If you are offering services on a voluntary basis, you are not required to have a practising license by AAT.

On whether you should have professional indemnity insurance: Yes, if you are offering services for payment: Don't know if you need it if offering services on a voluntary basis; check directly with AAT or a business insurer.

If offering services for money you also need to be registered with a supervising body under the Money Laundering Regulations, and you need to be registered with the Information Commissioner's Office.

Your colleague needs to get a business bank account. It will get messy trying to separate personal and business transactions. Your colleague's bank will not be happy if they discover this, and it may cause problems with HMRC if they decide to investigate your colleagues business.

On the bookkeeping. When recording payments for expenses, the credit should come out of the bank account not capital. If you want to record money being invested in the business, then the capital account should be credited with the amount invested, with the debit being entered into the bank account. The bank account then shows the operating funds balance of the business which can then be used to pay expenses.

Hope that helps.

Kind regards,

David.

ADAMBURSE1

Great thanks for your response David I am level 3 qualified and just starting my level 4.

I had advice on the matter and decided on balance it was better to stop until I get some work experience. But it's a great help I just have to remember to put the bank account in, as an intermediate step to PayPal accounts but it's great that I know that now and that everything else I was doing was correct as it was the first time doing it on transactions not from study materials.

HMRC were vague on their response on the issue, and AAT advice helped me to decide on the decision I made above.

Thanks again,

Adam