Accounting in two currencies?

saubryn

This might sound daft, but can you get into trouble for doing your accounting in two currencies?

My business is mostly onlie, I get paid in dollars, and all bar one of my regular business expenses are in dollars too. I started entering my accounts into quicken recently, and just out of habit noted them all in dollars. Then I hit the 'phone bill and wasn't sure what to do.

For the moment I've been converting that (my only real UK expense) into dollars, and keeping things balanced that way. Should I be doing it the other way around? If so, do I need to update the exchange rate every time I do a transaction? It seems wierd to do it that way.

I'm just worried about halving (or whatever the exchange rate is) everything at the end of the tax year - I take it you can't just do that?

CrustyMcMuffin

A company I worked at dealt with accounts in sterling and US dollars. Our chosen currency was sterling and whenever anyone paid a dollar based bill we converted it using the offical exchange rate for that month posted on the HM Customs & Excise website.

saubryn

Thanks for the response! The thing is its the other way around for us - only one transaction that occurs regularly in UK money

Are the amounts available going back a long time? It might be easier to just convert transactions in one go.

Plus I'm not sure what to do about recieving money in Paypal in dollars, then paying it back out in a different month, but still in dollars - if the exchange rate changes can that mess things up?

The more I think about it, the more worried I get

CrustyMcMuffin

You will find the exchange rates going back to 2002 here

If the exchange rate changes between 2 payments then obviously the amount it's worth in sterling will change. Sometimes this benefits you and sometimes you are left to make up the difference.

I'm sure if you called the inland revenue someone there could give you better advice than I can. Not quite sure what the right department to contact would be though.

jessicamb

You can find more details on the technical accounting requirements here

But you might want to speak to your accountant if you are worried. The Inland Revenue should accept any practice as long as it is in line with accepted accounting practice.

saubryn

Thanks both of you for those links!

For the moment I'm going to stick with recording in dollars, and convert later, armed with that link (I'll keep records of everything in case its wrong though). Once I can think straight I'll call the inland revenue and ask them to clarify, as that site is a bit intimidating.

I'm still reeling after the last time I rang them, so need to pluck up the courage, but keeping books of any form is good practice -I'm not usually so organised!