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  • FIRST POST
    • deannatrois
    • By deannatrois 6th Oct 17, 11:46 PM
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    deannatrois
    Small Business QuickBooks Expense Categories Advice
    • #1
    • 6th Oct 17, 11:46 PM
    Small Business QuickBooks Expense Categories Advice 6th Oct 17 at 11:46 PM
    I am helping my Ex with setting up Quickbooks for his accounts. Useful experience for me as I have just started an AAT course. I do have bookeeping experience from yonks ago but didn't have to categorise expenses like this in such detail

    He has employed an accountant but well, the accountant seems to know less than we do and definitely doesn't understand the business my ex works in. Can do Self Assessments. Inspite of inviting us to use 'his' company's Quickbooks package for a monthly fee which we didn't take up - didn't seem to know how to use it very well. Unfortunately he's stuck with him for the next 3 months (to do the 16-17 tax assessment). I think we came out of a training session with him more confused rather than less.

    I am having big problems with knowing how to categorise expenses. The accountant said fuel goes into Travel but stuff online says thats for things like taxis, air travel etc. My ex is a security guard (with dog) so there is a lot of travel from site to site. Initially we were going to put Fuel into a main category of Vehicle expenses but the accountant definitely said no to that one.

    Dog expenses - like food etc.., I have set up a separate category for that.

    Gas canisters to keep his van warm (he often does 24 hour shifts so stays in a van with cooking facitlities and heating). I am sure the accountant would say that is Travel as well but I'm not so sure.

    But I am just guessing and don't know enough to see the big picture and if I am categorising things correctly.

    Is there anything (book, online site) that tells you what categories to put expenses into when entering them into Quickbooks online software? I have tried googling but not really coming up with anything useful. Should I just be viewing things from a self assessment point of view and looking at the HMRC site?

    The business does not have enough income to need to be VAT registered but is starting to move into a higher tax bracket so I do need to deal with the expenses properly.

    No I am not being paid lolol.
    Last edited by deannatrois; 06-10-2017 at 11:55 PM.
Page 1
    • Savvy_Sue
    • By Savvy_Sue 7th Oct 17, 12:38 AM
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    Savvy_Sue
    • #2
    • 7th Oct 17, 12:38 AM
    • #2
    • 7th Oct 17, 12:38 AM
    QB has two separate ways of classifying things: I can't from memory remember how they are described, but that might be part of the confusion for you. I know one is 'class' and the other might be 'account', but that doesn't mean bank account. Or it might be something different. Sorry haven't used it for yonks.

    The main thing is to be utterly utterly consistent at this stage. If you then find that 'fuel' needs to be in a different class, at least it will all be in the same place to start with.
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    • maisie cat
    • By maisie cat 7th Oct 17, 6:03 AM
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    maisie cat
    • #3
    • 7th Oct 17, 6:03 AM
    more is better than less
    • #3
    • 7th Oct 17, 6:03 AM
    create a separate account for fuel. it is better to have more accounts and add them together. having to go through the detail in an account with a highlighter to separate is soul destroying. Print of the returns from hmrc website, it will give you a good idea ofvwhat is required. I am a qualified acct and if you go to the effort of the books the actual returns are easy. Your husband's business does not sound complicated. good luck with your studies
    • dancing_star
    • By dancing_star 7th Oct 17, 7:27 AM
    • 111 Posts
    • 175 Thanks
    dancing_star
    • #4
    • 7th Oct 17, 7:27 AM
    • #4
    • 7th Oct 17, 7:27 AM
    I'm an accountant and I'm sorry but I inwardly (and outwardly) scream when a client uses Quickbooks. It's not user friendly for either the user or the accountant in my experience.

    That said, I'd second the advice to keep things consistent and to use more rather than fewer categories - it is definitely easier to lump rather than split at year end time.

    Can I ask why he chose that particular accountant if he doesn't seem to know much about it?
    • trailingspouse
    • By trailingspouse 7th Oct 17, 10:35 AM
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    trailingspouse
    • #5
    • 7th Oct 17, 10:35 AM
    • #5
    • 7th Oct 17, 10:35 AM
    I'm an accountant and I'm sorry but I inwardly (and outwardly) scream when a client uses Quickbooks. It's not user friendly for either the user or the accountant in my experience.
    Originally posted by dancing_star
    I'm glad you said that. I keep seeing the adverts, and think I 'ought' to use it (I currently still use an XL spreadsheet our accountant provided for us 6 years ago, which works well for us and I'm assuming works well for them). I had a flirtation with Sage a few years ago and despite doing the 6 months (6 months!!) online training I was no further forward and gave it up as a bad job.

    My advice is - whatever you do, keep it simple. Accountants basically charge by the hour, so the easier you make it for them, the less it will cost you.
    • Pennywise
    • By Pennywise 7th Oct 17, 12:02 PM
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    Pennywise
    • #6
    • 7th Oct 17, 12:02 PM
    • #6
    • 7th Oct 17, 12:02 PM
    I'm an accountant and I'm sorry but I inwardly (and outwardly) scream when a client uses Quickbooks.
    Originally posted by dancing_star
    I'm the same, but I scream whenever a client comes in who's decided to train themselves to use ANY book-keeping software. Quickbooks is bad, but Sage is downright awful. Self-training is always a recipe for disaster in my opinion. I always sit down for a couple of hours to show them exactly what and how to enter for their business, so we can cut out all the unnecessary stuff and keep it simple.

    There are lots of different QB versions though. The desktop versions are very different to the modern online versions, and there are different "levels" within each, i.e. simplestart for very simple businesses is pretty much idiot proof. Just as the basic entry level Sage online is likewise idiot proof. It's the more comprehensive versions that are problematic.

    There are others which are not only easier to use, but easier for the accountant to correct, such as Kashflow or VT, where the accountant can tick a whole variety of entries in one code and move them to another at just 2 or 3 mouse clicks. That kind of functionality saves so much time and means the old quandry of which code to use doesn't matter so much. On the contrary, with others, such as Sage and QB, you have to make that kind of correction on an entry by entry basis which can take hours!

    But I would agree with Maisie - the more accounts the better, and also dancing_star with being consistent.
    • Pennywise
    • By Pennywise 7th Oct 17, 12:05 PM
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    Pennywise
    • #7
    • 7th Oct 17, 12:05 PM
    • #7
    • 7th Oct 17, 12:05 PM
    (I currently still use an XL spreadsheet our accountant provided for us 6 years ago, which works well for us and I'm assuming works well for them)
    Originally posted by trailingspouse
    Sadly, with MTD coming in, use of spreadsheets will become a thing of the past. If you're VAT registered, you'll have to submit VAT figures by accounting software from 2019 (they're closing their online website submission system. They would accept data based on a spreadsheet, but only using some kind of spreadsheet conversion software, for which no software providers have yet indicated any intention to make!). If you're not VAT registered, you have more time, but compulsion of data submission via software will come eventually, all part of HMRC's master plan to scrap tax returns!
    • dancing_star
    • By dancing_star 7th Oct 17, 2:08 PM
    • 111 Posts
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    dancing_star
    • #8
    • 7th Oct 17, 2:08 PM
    • #8
    • 7th Oct 17, 2:08 PM
    Quickbooks is bad, but Sage is downright awful. Self-training is always a recipe for disaster in my opinion.
    Originally posted by Pennywise
    I actually like Sage. Probably because i'm most familiar with it. I am quite impressed by Xero as well. Not seen Kashflow or VT.


    There are lots of different QB versions though. The desktop versions are very different to the modern online versions, and there are different "levels" within each, i.e. simplestart for very simple businesses is pretty much idiot proof. Just as the basic entry level Sage online is likewise idiot proof. It's the more comprehensive versions that are problematic.
    .
    Originally posted by Pennywise
    I find the online QB awful. Keeps crashing, and takes ages to work your way round the reports.

    I would say that without properly reconciling the bank on a regular and frequent basis there is little point in using accounting software. The accountant will have to unpick it all anyway. So yes, I agree, proper training, not self-training, is the best approach.
    • deannatrois
    • By deannatrois 7th Oct 17, 7:35 PM
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    deannatrois
    • #9
    • 7th Oct 17, 7:35 PM
    • #9
    • 7th Oct 17, 7:35 PM
    Very glad I posted, thank you for your answers.

    Unfortunately I told my Ex to not sign anything until we'd discussed it but he did sign an agreement to pay £140 a month for full bookeeping. I then managed to negotiate that down to just three months at £140 each to cover the three months of work needed to produce a self assessment return for Jan-Mar 2017 for the 2016-17 Tax year. This included free training so I could do the bookeeping. Plus £200 for the self assessment. So I guess a bit of a fools agreement. But given the advice he's given so far, wouldn't be confident we wouldn't find ourselves in trouble with HMRC at a later date. he just doesn't seem able to understand our business, perhaps more used to Limited Company accounts, I don't know.

    The free training seemed to show he didn't really know how QBs online worked, hadn't set up any of the categories I needed (which we had specified) with him saying that he needed them to have numbers consistent with his company codes (I hope that makes sense) which he didn't supply. I'd have appreciated a list of categories with the code numbers his company used to make life easier if he couldn't input them into our QB himself.

    QBs, yes its a bit of a nightmare. Even with advice from QBs and looking at numerous forums been unable to get an essential special field to show up when printing out invoices (shows in QBs not when printed inspite of altering printer settings in QBs). But from replies on here, it looks like we have to be using some sort of accounting software.

    I've sent three emails to our accountant without a single reply so it looks like we have to figure it out for ourselves.

    I can't figure out, for example, how to enter the vehicles my ex has purchased. Put a vehicle category under tangible assets (know I have to create a subcategory for each vehicle) but how do I actually enter the vehicle into there - through an expenses window?

    I do feel I could make a major mistake just through lack of accounting /tax knowledge and how to do things with QBs. And well, an accountant who didn't seem to understand a dog needs feeding so is dog food is an allowable expense (he's obviously essential to the work my ex does)? Then there's my exs food. Tax rules are complicated. He often does 24 hour shifts and has to eat on the job, but is the food he buys allowable (he doesn't buy takeaways we are talking well under the fiver a day allowance)? I just don't know enough and not getting answers I can trust if I get any, from our accountant. But stuck with him because of the agreement. My ex hasn't kept a record of his mileage so does that mean we will have disputes over the fuel costs later on? Accountant doesn't seem to be available to ask.

    It wasn't until the training we realised he probably wasn't right for the business. But too late by then.
    Last edited by deannatrois; 07-10-2017 at 7:58 PM.
    • Savvy_Sue
    • By Savvy_Sue 7th Oct 17, 7:59 PM
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    Savvy_Sue
    Just going to pick up on the mileage and suggest some damage limitation here. From now on he really should log his mileage, but if he hasn't, then he needs to get his work diary / records, open google maps, and write down the google maps mileage for each work day.

    If you say he doesn't keep records of where he's worked each day, as this is your ex, I'd suggest washing your hands of the whole situation ...
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    • deannatrois
    • By deannatrois 7th Oct 17, 8:22 PM
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    deannatrois
    He does keep records of where he works & for how long very stringently (invoicing his client depends on that). But no records of mileage. Bit strange because he did record mileage when working as an employee. But will be keeping a record of his mileage from now on.

    Have been on at him to get things organised for 9 months lol.., he's done pretty well keeping receipts but its obviously a bit of a job entering everything now, 9 months on. But got to be done.

    I have booked myself for a Quickbooks Webinar on October 11th. Going to another accountant next week. Badly need tax advice relevant to the business type. Not sure what we'll do about the initial accountant. Might have to just take our losses on that mistake, we'll see. Better than finding the business with an unexpected tax bill but hoping I can just pay him for the unhelpful 2 hour training session.
    Last edited by deannatrois; 08-10-2017 at 2:57 AM.
    • 00ec25
    • By 00ec25 8th Oct 17, 12:42 AM
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    00ec25
    I'm going to be at odds with the accountants above as I'd suggest you look at the various QB Online tutorials that are available on You Tube. Just make sure you avoid ones done by Americans dealing with specifics applicable to their accounting system (1099 reports for example)

    For example, is one for setting up new accounts:
    https://www.youtube.com/watch?v=xp-rcPZtUc0&list=PLVxBmyedTVhRnNpk_z4Lac1EhpZkRjDuF&i ndex=18

    this is customising your invoices
    https://www.youtube.com/watch?v=SJW4skFvOPk

    and this is QB's own UK channel with various tutorials that should be of use
    https://www.youtube.com/user/IntuitUK/playlists
    • deannatrois
    • By deannatrois 8th Oct 17, 3:07 AM
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    deannatrois
    Thank you.

    I have picked my way through any useful tutorial I've been able to find. I think its QBO itself that is causing problems with the invoice special field as its definitely been set up correctly. Some of the tutorials were useful. But I've now purchased Quickbooks Online for Dummies for more detailed help.

    I like things organised. I am learning fast but need better professional help too. Another accountant next week., now we have a better idea of the questions we should have asked the first one. Will ask him for sources of information too.

    Will get there. I've had to give my AAT training a rest for a couple of days but I reckon doing the practical bookeeping will reap rewards with that too as I've forgotten more than I remember from my accounts days lol. I'm way ahead of the timetable anyway.
    • daddy_bro
    • By daddy_bro 8th Oct 17, 2:42 PM
    • 24 Posts
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    daddy_bro
    I'm watching this thread with interest as your ex's business has many similarities to mine, I'm a computer engineer working as a contractor so doing lots of miles in a van and very few purchases as basically selling labour only. For now I'm using a Google spreadsheet which I have shared with my accountant. This means she can take a look at it anytime so hopefully that isn't a stupid thing to do.
    I can't believe the accountant was charging £140 per month, that sounds extortionate for such a simple business, I've been advised here that I should expect to pay up to £500 for the year end accounts and have found someone who quoted £400.
    Did he have to buy the van outright, on hp or is he renting it? I think it makes a difference to how you claim your expenses for it.
    Are you planning to claim for his mileage by individual receipts or by the mile?
    My accountant advised me to keep a diary of my mileage but not to record every journey on the spreadsheet. I do record every purchase of fuel though.
    • 00ec25
    • By 00ec25 8th Oct 17, 3:39 PM
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    00ec25
    My accountant advised me to keep a diary of my mileage but not to record every journey on the spreadsheet. I do record every purchase of fuel though.
    Originally posted by daddy_bro
    so your accountant has not ensured you understand the difference between claiming the approved mileage rate allowance and claiming all costs adjusted for private/business usage %

    https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances

    https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-

    you get what your pay for in terms of accountants!
    • Pennywise
    • By Pennywise 8th Oct 17, 5:09 PM
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    Pennywise
    I'm watching this thread with interest as your ex's business has many similarities to mine, I'm a computer engineer working as a contractor so doing lots of miles in a van and very few purchases as basically selling labour only. For now I'm using a Google spreadsheet which I have shared with my accountant. This means she can take a look at it anytime so hopefully that isn't a stupid thing to do.
    I can't believe the accountant was charging £140 per month, that sounds extortionate for such a simple business, I've been advised here that I should expect to pay up to £500 for the year end accounts and have found someone who quoted £400.
    Did he have to buy the van outright, on hp or is he renting it? I think it makes a difference to how you claim your expenses for it.
    Are you planning to claim for his mileage by individual receipts or by the mile?
    My accountant advised me to keep a diary of my mileage but not to record every journey on the spreadsheet. I do record every purchase of fuel though.
    Originally posted by daddy_bro
    A lot of that will depend on whether you're a sole trader or whether you a trading via a limited company. Different rules and procedures for each, meaning different accountancy fees. Also whether the accountant is qualified or not.
    • deannatrois
    • By deannatrois 9th Oct 17, 4:51 AM
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    deannatrois
    He purchased initially a car, and then a van outright so no financing involved.

    We are now preparing mileage reports through an App called MileIQ. If you enter postcodes for where you went each day (have to do return journeys as well), it calculates the 45p a mile (you enter your car model) mileage allowance. From reading the HMRC website I believe if you use mileage calculations at 45p a mile (if under 10k miles) this is judged to contain a proportion to cover petrol costs, car purchase costs and insurance. Once we get current, the app will pick up his journeys automatically but a bit of a life saver at the moment lol.

    But I get very confused when I start wondering if I now need to take all the fuel/insurance costs out of Quickbooks. I haven't and won't until spoken to an accountant who seems to know what he/she's doing. I would have thought these should be included as they are business costs, and are business expenses, so reducing net profit.

    Head is just spinning lol. Trying to figure out how prepare what you need for tax assessments while still maintaining 'big picture' books for the business. Are mileage calculations separate to the books for the business (i.e. just produced for the self assessment form)? I could be being completely stupid (and obviously have a lack of knowledge of self assessment and 'the big picture' in accountancy terms) but head is mush lol.

    And try calculating 10 months of daily mileage even if you are putting it into an app lol.., my ex can work from 20:00am to 8am then go back at 16:00 so having to be quite careful with dates.

    I am very glad its helping at least one person!

    Eagerly awaiting the arrival of my Quickbooks Online For Dummies book as well.

    If you hear a small whimper and bang, my head has disappeared lol.
    Last edited by deannatrois; 09-10-2017 at 8:33 AM.
    • Lafuma
    • By Lafuma 9th Oct 17, 8:18 AM
    • 21 Posts
    • 8 Thanks
    Lafuma
    Sadly, with MTD coming in, use of spreadsheets will become a thing of the past. If you're VAT registered, you'll have to submit VAT figures by accounting software from 2019 (they're closing their online website submission system. They would accept data based on a spreadsheet, but only using some kind of spreadsheet conversion software, for which no software providers have yet indicated any intention to make!). If you're not VAT registered, you have more time, but compulsion of data submission via software will come eventually, all part of HMRC's master plan to scrap tax returns!
    Originally posted by Pennywise
    Is this the MTD that was first announced in July this year?
    If so, I believe the details were only published about 1 month ago.
    As you say, it is not going to be introduced until 2019, and hopefully between now and then, there will be some software available to support small businessess.
    I'm hoping someone will offer it for free for small businesses, like the various PAYE software available, offered in the hope you will upgrade to their premium software in due course.
    • 00ec25
    • By 00ec25 9th Oct 17, 9:04 AM
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    00ec25
    He purchased initially a car, and then a van outright so no financing involved.
    Originally posted by deannatrois
    so how have you accounted for the purchase costs?

    as "you" are a sole trader has the car and/or van been "brought" into the business? If it has you will need to adjust for personal use, hence the need to keep a mileage log.

    We are now preparing mileage reports through an App called MileIQ. If you enter postcodes for where you went each day (have to do return journeys as well), it calculates the 45p a mile (you enter your car model) mileage allowance. From reading the HMRC website I believe if you use mileage calculations at 45p a mile (if under 10k miles) this is judged to contain a proportion to cover petrol costs, car purchase costs and insurance. Once we get current, the app will pick up his journeys automatically but a bit of a life saver at the moment lol.

    But I get very confused when I start wondering if I now need to take all the fuel/insurance costs out of Quickbooks. I haven't and won't until spoken to an accountant who seems to know what he/she's doing. I would have thought these should be included as they are business costs, and are business expenses, so reducing net profit.
    Originally posted by deannatrois
    ooops. The mileage rate is, as you say, intended to cover all the costs of a vehicle. If you claim the mileage rate you cannot account for the running costs of the vehicle as a separate part of the business expenses, that is double counting and is precisely why there is the option of using the "simplified expenses" system when you are a sole trader so you avoid having to record lots of bills and adjust each for personal use

    Head is just spinning lol. Trying to figure out how prepare what you need for tax assessments while still maintaining 'big picture' books for the business. Are mileage calculations separate to the books for the business (i.e. just produced for the self assessment form)? I could be being completely stupid (and obviously have a lack of knowledge of self assessment and 'the big picture' in accountancy terms) but head is mush lol.
    Originally posted by deannatrois
    as sole traders there is no distinction between the business and the tax. Either the expenditure is business related and thus reduces his profits and his taxable income, or it is personal expenditure and thus irrelevant

    his business mileage log is a vital part of the business expenditure record

    And try calculating 10 months of daily mileage even if you are putting it into an app lol.., my ex can work from 20:00am to 8am then go back at 16:00 so having to be quite careful with dates.
    Originally posted by deannatrois
    whilst no one can say if you will be "lucky" enough to get a tax inspection, without a mileage log "you" will be on a rather sticky wicket without one, so keep at it.
    Last edited by 00ec25; 09-10-2017 at 9:09 AM.
    • deannatrois
    • By deannatrois 10th Oct 17, 5:57 AM
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    deannatrois
    Thank you OOec, I am finally understanding the distinctions. What you said above ties in nicely with the 'put vehicle expenses in drawings' the accountant suggested.

    Yes mileage calculations are well on the way now.

    I have changed accountants. The new one will do the year end accounts and self assessment for £400 plus vat. Extra time needed to help with setting up things will be charged but even if its £2-300 or even £500 (the first year) its a lot less than the other guy was charging. The other accountant has agreed to let me end the relationship,, which was nice of him. I guess he knew it wasn't a good fit.

    The new accountant gave me lots and lots of information. I can set up our vehicle expenses as drawings, and then credit the mileage allowance for the car within that. The van we might be better off treating as a commercial vehicle as initial purchase and more expenses are allowable against a commercial vehicle. Practically, I have got to look into a way to set up subcategories within drawings to make them vehicle specific. So today will be using links I have found online to help with learning about that.

    He also said that the food expenses my ex has (he just buys food we are not talking expensive take aways or eating out bills) should be allowable as well. Dog expenses will be proportionately allowable but no idea yet how to work out the proportion as my ex works 6 days a week, sometimes more when its 24 hour shift blocks. Yes he gets tired but I guess we are both a bit obsessive lol. I think for him, its just so much better than the minimum wage jobs he's had ever since I've known him (along with the attitude he used to get from people he worked for). Its nice to see him getting paid well. He's even managed to get another contract for his contractor (he's very good at networking and establishing a trusting relationship, employers have been taken the mickey for years.., now he's doing it more for himself).

    So a lot of sorting out to do, but its doable. Will be doing some research today, and then will email some questions to the accountant but aware of needing to solve as much as I can myself. My Quickbooks online for Dummies book has turned up. So lots of reading. I need to know how to produce useful reports as much as anything. its already proving useful.

    Thanks for all your advice.., it has been a big help.
    Last edited by deannatrois; 10-10-2017 at 6:09 AM.
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