Director Loans

chrismac1

I prefer my clients not to do their own book-keeping. I have about 12 which do, via Xero, Quickbooks and Clearbooks. Of those who do this but do not also use a professional book-keeper:


1. NONE can get the basics right, such as the software bank balance agreeing to the bank statement.


2. ALL get extra fees from me to sort out the resultant mess.


MTD is a car crash waiting to happen. Out of all my clients, NOT A SINGLE one has had any communication from HMRC about this. When you compare that to the massive fanfare over auto-enrolment pensions, or self-assessment back in the day, this is an utter joke. It suggests to me that secretly HMRC top brass think it is the same bag of knackers everyone else thinks it is.


If they force it through, there will be casualties and blood flowing. None of this will be mine or belong to my clients. That is my sole objective for MTD.

00ec25

our practice focuses on contractors and all are expected to do their own bookkeeping for which they are "given" FreeAgent as it is about as simple as you can get whilst still being of more use for an accountant than VT would be. (I've experience of VT before, it works well ..... for basic bookkeeping!)

we subject them to intense IR35 review on engagement and include ongoing reviews on demand for their new contracts

If their bank does not reconcile each VAT quarter then their VAT does not get done until it does. They know the deadlines and surcharges so it is very rare for them to fail, although of course it can be somewhat pressured. If they can't or won't do it they get a supplemental bookkeeping charge at an hourly rate - very few let it get that far!

From our point of view the responsibility is on them to keep their own records. There are some who will upload receipts and so you can be much more comfortable with the info when doing the accounts, but the majority do not, so the onus will be on them if they have recorded incorrect or invalid info. That is where it is useful to only have "simple" contractors as clients as most expenses are pretty transparent just from the bank statement payee details.

We do have some "traditional" businesses. They get done in a proper ledger system (Xero in our case) so we can produce management accounts etc as required. They either have their own bookkeepers, or we do it for them. No half way house for that sort of client, as we need confidence that the underlying paperwork is present and correct.

chrismac1

Xero has a Finance Director who thinks massive borrwing, negative cash flow and losses are just fine for Xero. Yet his company is busy promoting itself as the "go to" solution for numerous small buinesses to improve profits and cash flow.


Some of these online software providers are going to go "pop!" in the next 5 years, no doubt leaving every user totally high and dry. And if you ask me, if selling shares short was a bit cheaper and easier to do, I would be going short of Xero big time.

lebowski1980

Chrismac, interesting thoughts on Xero. I will try and check out their financials. For a cloud service like Xero are there any built in assurances such as accessible backups if the company goes belly up? (I assume clients are encouraged to keep trial balance hard copy backups and the sort?)

One concern is how quickbooks/xero and the like encourage the idea that anyone can maintain a ledger properly. Invoicing and expense tracking can be easier but i guess it can lead to more end of year clients who 'just want their tax done'?

00ec25, thank you for the response. The general consensus here is to keep traditional clients where the books and tax affairs are kept together. I think that's a good idea especially when it is your name/company name on the line.

I will look at freeagent as an alternative to VT. I do love VT for it's simplicity and offline capabilities and have used it for a long time myself when doing some seperate sole trader work.

MTD is a big one and i just see it as another way to pass a function from HMRC to 3rd party suppliers. I have seen some solutions appearing for intermediate filing from non-compatible software so those companies are already hedging their bets that it will come in to force!

chrismac1

VT is the best by miles in my view, saves me lots of time.


The cloud is disrupting the market, in the end in a good way but for now in my view in a bad way. The adverts are just ridiculous, giving everyone the impression you can just click and post and that's the end of accounts and tax for you.


Sage has just lost their MD, their shareprice is down from £8 in 2000 to £6 now. Still a very viable company compared to the likes of Xero, Clearbooks and Freeagent.


My recommendation if you MUST go the the cloud is Quickbooks. The Intuit share price is at record highs and they are consitently doing share buybacks from surplus funds. If I had to bet my house on one of these guys still being here in 2023, Intuit QBO would be my pick.


It's a very robust product, as the Quickbooks product has been out for over 20 years and tested in action in many different countries. Compare that to the likes of Xero who have minimal track record by comparison, and seem to use their users as a free source of Beta testers for new modules - without, of course, having the decency to inform their users of this up front.

lebowski1980

Do you still use VT for clients then Chrismac? It's still my preferred choice to be honest but worried about the fact they won't develop any longer if new vat schemes came in to effect for example. I guess you can work around it but it's not clean.

I tried Xero on a trial. The major offputting thing to me as an accountant on first glance was how the bank ledgers are closed off for journals! Why should i need to create a dummy creditor or debtor when i just want to process payroll or the like. It's not as clean. And i agree with your bete testing theory.
As an accountant i would expect unadulterated access to manage the ledger the best way i see fit

I've not looked at quickbooks yet but will give it a trial

Pennywise

Personally, I don't like QB nor Xero. Where we do client book-keeping in house, it's VT. For contractors, they do their own data entry into Freeagent. For other non-contractor clients, I actually prefer Kashflow, simply because it's so easy to reallocate multiple transactions if clients post to the wrong account (just like VT), so very quick/easy to correct client's efforts, unlike other cloud offerings which have to be done individually. (Yes I know Kashflow is a bit clunky and not as refined as QB nor Xevo, but I care about functionality not how it looks!).

chrismac1

Thanks I think I'll take a look at Kashflow. There are 2 big benefits of VT compared to Sage, QB, Clearbooks and Xero:


1. It is very quick to move multiple transactions posted wrongly. Simply highlight them and go "move". How hard is that? Note that SAP (!!!!) also has this functionality, for people defined as "Super-users" as I was. How hard is that? So the bought ledger clerk can't go to sleep and mispost 1,000 transactions with 1 click, but the super-user (who is responsible for the bought ledger clerk's clicks as well as his own) can do that.


2. Seamless and very quick updating of adjusted source ledgers right through to final accounts and tax.


Taken together, these enable much greater speed PLUS much lower chance of misposting. What's not to like about that?


Oh, and not forgetting this all comes at lower cost compared to QBO, Xero and the rest. This market is bonkers, the best products cost less than the poorer ones!

uknick

lebowski1980 wrote: »

I tried Xero on a trial. The major offputting thing to me as an accountant on first glance was how the bank ledgers are closed off for journals! Why should i need to create a dummy creditor or debtor when i just want to process payroll or the like. It's not as clean. And i agree with your bete testing theory.
As an accountant i would expect unadulterated access to manage the ledger the best way i see fit

I've not looked at quickbooks yet but will give it a trial

Interesting comment about Xero and not allowing manual journal to post to the bank account.

We use QB for our clients and one has just spent ages reconciling their bank account for year end because they post manual journals for their payroll and hadn't processed them correctly.

I've suggested they use a payroll suspense account so that only the cash transactions go through the bank account, making it a lot easier to reconcile. As their business only makes/takes payments through bank transfers I think this suits them.

But, I do agree the software package should not restrict how we wish to do the accounts as one size invariably does not fit all.

lebowski1980

uknick, yes i see what you mean - i guess that it depends how you were brought up in your accounting life
Another example would be bank fees which as far as I'm concerned would be a direct credit to bank and debit to bank fee expense but obviously Xero knows better and i should be using a creditor account to process these. I get that you can then report on these transactions by creditor which could be useful perhaps but this is where my industry experience comes in - I've worked for major institutions and SME's and have never processed that kind of expense by any means other than a direct journal.