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The bookkeeping reports

24 June 2010 No Comment

Every time a bookkeeping exercise is done, we generate a number of reports. You may not need them all, although we provide all relevant reports to all clients, just to be on the safe side. You’ll also notice that we tend to show dates in scientific notation YYYYMMDD so that similar files are listed in date order.

As a bare minimum, you should have a look at the profit and loss report which shows you how your business is going. And,check teh aged debtors report to see how much your customers still owe you.

If you like to know everything about everything then the ledgers report has the most detail.

Our primary point of reference is your business bank account and that’s why we tend to focus on detailed bookkeeping reports first. All of the supporting documentation you give us adds to a fuller understanding of the accounts and enables us to prepare simpler (and summarised) accounting reports like a profit and loss account.

Here’s a full list of what we prepare, though if you are not VAT registered then you can ignore the 300XXX series of reports. Ordinarily these reports relate only to one quarter in isolation.

  • 300320 VAT report
  • 300330 VAT return
  • 300335 VAT acknowledgement
  • 4XX120 ledger report
  • 4XX220 aged dectors
  • 4XX160 interim balance sheet
  • 4XX560 interim profit and loss account

Some reports borrow a 4 digit coding system from Sage. For details of how we use that please see this blogpost.

The 300320  report – a substitute VAT return

D – The VAT period (usually one quarter, but not always).

E – The net VAT you need to pay to the VAT office.

The 300330  report – A copy of the HMRC VAT return

The figures on this report are normally the same as the 500100 report. We provide a copy of the 500130 report because (a) the VAT office rules require it and (b) you will know categorically, precisely what information has been submitted to HMRC.

The only time that figures on the 500100 and 500130 reports may differ is when some sort of correction to a prior period has been made. If this is the case we will have a 500120 report which reconciles the differences.

The 300335 report – A copy of the HMRC submission receipt

Your proof that the VAT return was submitted.

The 4XX120 report – a full list of which transactions go into which ledgers

This is done the way that accountants like it, and we know some of you like it as well!

What you may be interested in are the Debtor and the Creditor sections of this report. That sets out, on a case by case basis, who owes your business money, and who is owed money by your business.

Most importantly, if you’re a director of a limited company, then you might feature in this report as a Creditor. Generally the Creditor ledger in your name shows how much you have taken out of your business. We try to keep it at zero as much as possible, so if that block is not visible don’t worry.

The report is presented from the company’s perspective. So if your Creditor balance is Black, you may owe the company money. The Company is “in the black” and that’s good from the point of view of the company. The problem is that it’s not good for you and (if it’s not going to be covered by your dividend, then) you have an interest free loan from your company. When that happens HMRC may charge you income tax on a benefit in kind, because they don’t like directors having interest free loans.

If your Creditor balance is Red then that’s good for you (and not for the company) as the company owes you money.

Moreover, if our records do not wholly agree to your records, this 444120 report will help you establish any differences. Amendments to our records will involve double entry bookkeeping. So if you want something changed, you will need to tell us which two entries in the 444120 report are wrong and which two entries you were expecting to see. That may mean four bits of information for each amendment.

The 4XX220 report – a list of aged debtors – customers who have not paid you

The oldest unpaid invoices are on the right. You should chase these customers and collect these overdue payments.

If there are entries in red under “unallocated creditors” then the records are showing that you have been paid by a customer, but you have not invoiced that customer! Whether it’s an overpayament by them, or a missing invoice in your system, you need to correct the mismatch before the end of the latest quarter.

Do not ignore aged debtors – they owe you money! If your records show that the old amounts have actually been paid before the end of the quarter date, then you need to let us know how and when the payment came in, because we didn’t see it on the bank statement!

The 4XX160 report – an interim balance sheet – a snapshot of the business on that single day.

This tells you what the business may be worth on the open market.


V – Fixed Assets – the value of the assets owned by the business (after allowing for depreciation)

W – Customers – How much your customers owe you. If this figure is negative it will be in brackets and that means that your customers may have overpaid you.

X – Suppliers – How much you owe your suppliers. Negative figures (in brackets) mean that you owe them. Positive figures mean that they owe you.

Y – Other Creditors – People like the Collector of Taxes (for corporation tax), the VAT office and the directors who may be owed some money or (if the figures are positive) who may actually owe the business some money. Pay particular attention to the Corporation tax figure which is the amount due for trading years that have already ended, and the Corporation tax provision figure which is a forecast of the amount due for the current year to date.

Z – The Balance Sheet Value – the net worth of the company. If this is negative (ie. if it’s in brackets) then technically you are bankrupt. It is illegal to continue trading if you are insolvent. Talk to us because a short term deficit may be tolerated, but a persistent deficit needs suitable action. If the Balance Sheet Value is positive, then this is the value of the total shareholding, and it’s the amount you (combined with and all the other shareholders) could expect to receive if you sold the business on the open market. Don’t get too excited. If the figure is less than quarter of a million, nobody will really be interested in buying. It will have to be more than one million before you can expect any serious prospect of getting a potential buyer to be interested in buying your company!

The 4XX560 report – an interim profit and loss account for the year so far.

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A – The first set of columns give the figures for this individual bookkeeping period. That is normally a three month period which fits in with the VAT quarters.

B – The picture for the whole trading year to date (YTD). That is provided so that you can asses the activity in the current quarter and see if it is in character with all the data we have since day one of this trading year.

C – The expense categories that we know about. It is worth having a proper look at these in case something obvious is missing, or in case expenses are being categorised incorrectly.

D – A forecast of the corporation tax due. This does not appear on self employed accounts, because income tax for the self employed depends on many factors and not trading profit alone. In all cases you should keep a tax reserve to one side so that you’re ready and have enough funds on the due date.

E – The bottom line – this is your profit/(loss)

So why do these figures sometimes differ from your accounting package?

That depends! There is no logic in tax law! And the net profit for accounting purposes is not always the same as the net profit for tax purposes. Differences may arise on account of depreciation and capital allowances. Or, by virtue of some disallowable category or disallowable VAT. Quite often we discover that the VAT treatment of records in online accounting packages is incorrect, and we adjust for that when preparing our records.

And lastly, we prepare the forecast of the tax arising on business profits only. If your personal income exceeds £40,000 or if you have other forms of personal income unrelated to this business, then you will need a more detailed tax forecast. That is normally done when your personal tax return is prepared. The sooner that ‘s done (after 5 Apr every year) the better!

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