Bookkeeping for a Ltd company

SarahLu

Hello, looking for a bit of advice please.

My sister works for herself, the business is a Ltd company and she is the director with no employees. She has asked me if I want to do her books for her to try and cut down the money she spends on accountants fees.

I work for myself as a sole trader and keep all on my own records and do my own tax return etc, so I am familiar with the basics but I'm not sure how that would differ to a Ltd company. With regards to doing her book-keeping, would that just be pretty much the same as what I currently do for myself, i.e recording any income, out goings and expenses?

As far as I understand it she takes a basic salary (pays her accountant for a payslip - don't know if this is necessary or not?), then takes additional amounts as and when needed. Plus dividends, but I'm not familiar with how they work.

I would like to do the book-keeping as a minimum and potentially as much of the rest as I can as she wants to save the money and I need the work. Can anyone offer advice or suggest a good place to start looking into this? I've looked online but can't find anything spelling it out in really simple terms!

Thanks in advance.

Pennywise

The "book-keeping" itself is indeed just recording the in's and out's and is fairly simple for a numerate/organised kind of person.

But that's only half the story. Where an accountant earns their keep is the things like getting the optimum mix of salary and dividends, telling the director what expenses are allowable and what aren't (different rules for companies compared with sole traders), getting the tax returns and accounts right and on time to avoid penalties etc.

There are two completely different disciplines at play, being book-keeping and accountancy. Accountants usually do both, but a book-keeper can rarely perform the accountancy role unless they have lots of experience and can keep themselves up to date with the ever changing tax and accounting disclosure rules.

I'd suggest the best outcome here would be for the director to negotiate a lower fee for just the "accountancy" work, and for you to do the basic book-keeping. That way, she'll still get the advice needed and the accounts/returns done properly, but may save a little bit of money in you doing the number crunching instead of the accountant.

SarahLu

Thanks, that sounds like good advice. I will stick to the book-keeping side of things for now! Whatever records I keep have got to make it easier for them than what my sister currently provides, which is just her bank statements!

theburningcat

Xero+Receipt Bank will make very light work of any small business bookkeeping. I highly recommend using them.

booksurr

SarahLu wrote: »

Thanks, that sounds like good advice. I will stick to the book-keeping side of things for now! Whatever records I keep have got to make it easier for them than what my sister currently provides, which is just her bank statements!

whilst that is true in principle , if you put things in the wrong places and the accountant ends up having to find and unpick it may be counterproductive

for example:

SarahLu wrote: »

she takes a basic salary (pays her accountant for a payslip - don't know if this is necessary or not?), then takes additional amounts as and when needed. Plus dividends, but I'm not familiar with how they work.

it is a limited company. There are 3 ways to remove money from it: as salary via a "proper" payroll or as a loan repayment or as dividends. If she "helps herself as and when needed" then you will need to become proficient with bookkeeping to the directors loan account. That is straightforward once you know you have to do it, but you do need to have some basic knowledge when dealing with a company if you are trying to reduce the accountant's costs.

Kanoona

Hi

Payroll wise she's not paying just for the payslip. She'll be paying for the whole payroll process which needs to be submitted to hmrc through a somewhat expensive payroll system in real time i.e every week/fornight/month that her wages are processed. By law it has to be submitted in real time. Plus you'd need to process a payroll year end which unless you're planning on getting some training for this it is something I'd steer clear of and leave to the accountants. Dividends are usually given at year end after the financial statements have been produced by the accountant which is something you wouldn't have to do or legally be able to do.

Bookkeeping wise, you only really need excel spreadsheets however you would ideally need to know how this is to be set out. Although you can take on the bookkeeping, the accounting will still need to be done by the accountant so why not ask them how you should set the bookkeeping out for them so that your job and their job goes hand in hand? Theyre usually great in giving advice on this as it makes their job easier if the bookkeeping has been done well and easy to read.

Bookkeeping to trial balance is enough. Corporation tax is possibly something her accountant does too?

I think both of you speaking to her accountant about taking on some of the bookkeeping on yourself is the way to go.

SarahLu

Sorry , I did not receive any notifications so didn't realise there had been more replies to this.

I have done the book-keeping for last year and it has been submitted to the accountant so am awaiting feedback from them as to what else, if anything, they require on the spreadsheet.

Not sure about the directors loan account, she just makes withdrawls from her business bank account and these are logged on the spreadsheet, I guess the accountant does the rest.

Has anyone used quickbooks? The majority of what I have done looks like it could be automated on that as it links up to your bank account.

trailingspouse

I do the books for our limited company -

every week I log all income and expenditure, file receipts, and chase unpaid invoices
every month I send out invoices for work done that month, reconcile the bank statement, and do payroll (including mileage and out of pocket expenses)
every quarter I do the VAT and EC Sales list
every year I get everything ready for the books to go to the accountants. In fact, I was doing that this morning!!

I also complete the dividend certificates, produce the agenda and write up the minutes of board meetings, ensure that monies are transferred between accounts so that VAT and Corporation Tax don't take us by surprise, and I make any payments from the bank account that might be needed. Our business is quite simple (no stock, no employees, no work in progress, no premises, and we only have 2-3 clients per year) - but hopefully that gives you a bit of an idea of what's wanted. If she's currently just rocking up to the accountants with a pile of bank statements, I hope she gets a big discount when you start doing the books properly for her!!

paddyrg

My suggestion is to ask her accountant how they would like the books kept - they may suggest xero or wave or one of the other systems, or simply take your excel dumps and figure through them