Recommendations for preparing SE accounts

Hi, I would appreciate some advice on preparing self employed so I can complete my tax return. 
I started selling things on ebay and this has now built up to a small but profitable business, t/o approx £20k. The problem I have is dealing with all of the paperwork on top of a full time job and the ebay work, I have been doing my simple accounts on an Excel sheet so I can complete my return, though I have no accounts training so records can be a bit untidy. It may be time to get some accounts prepared professionally though I want to keep costs down, can anybody recommend an online service that would be able to do this for a reasonable amount?
TIA

Comments

  • uknick
    uknick Posts: 1,611
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    First question is are you cash based or accrual based?  I'm going to assume cash based from your post.  If you're accrual based it'll take more than a simple post to go through the ins and outs of that type of accounting.

    As you only need your total income and total expenditure for the tax return a spreadsheet will be fine.  I am an accountant and that is all I use for my sole trader accounts.  It's when you become a Ltd it significantly changes due to the additional reporting requirements.

    My best advice on how to manage your business transactions is don't let them build up. For example, do them every week.

    For sales make sure each one is recorded with its date and a unique invoice number in your spreadsheet.  This number should be on the invoice you give your customer.  Next to this add a column to record when and how much has been received.  This makes it a lot easier to chase for outstanding debts.

    Expenditure, just list the items you buy with what they are, the amount and date you paid the bill.

    It might be obvious to some, but you'll need the dates to close off each tax year you report.

    Finally, I wouldn't waste money on paying accountant regularly if your accounts are just adding up columns of numbers.  Having said that, a couple of hundred may be money well spent with an accountant as they can advice you on things such as if accrual accounting is better for you than cash.  They can also highlight additional items of expenditure you can claim for which you weren't before.   
  • uknick said:
    First question is are you cash based or accrual based?  I'm going to assume cash based from your post.  If you're accrual based it'll take more than a simple post to go through the ins and outs of that type of accounting.

    As you only need your total income and total expenditure for the tax return a spreadsheet will be fine.  I am an accountant and that is all I use for my sole trader accounts.  It's when you become a Ltd it significantly changes due to the additional reporting requirements.

    My best advice on how to manage your business transactions is don't let them build up. For example, do them every week.

    For sales make sure each one is recorded with its date and a unique invoice number in your spreadsheet.  This number should be on the invoice you give your customer.  Next to this add a column to record when and how much has been received.  This makes it a lot easier to chase for outstanding debts.

    Expenditure, just list the items you buy with what they are, the amount and date you paid the bill.

    It might be obvious to some, but you'll need the dates to close off each tax year you report.

    Finally, I wouldn't waste money on paying accountant regularly if your accounts are just adding up columns of numbers.  Having said that, a couple of hundred may be money well spent with an accountant as they can advice you on things such as if accrual accounting is better for you than cash.  They can also highlight additional items of expenditure you can claim for which you weren't before.   
    Thanks for the reply. I have always chosen the based figures, though in all honesty, I probably don't fully understand what that means. As all the sales are through ebay I don't have to bother with invoices, debtors or chasing late payers, ebay send a report of all transactions showing gross & net figures after deduction of their fees, so I assume that is enough. I keep a separate sheet for my expenses, which don't come to much. I presume you mean the dates the trading year finishes & the next one starts have to match.

    What I worry about is, if I'm asked to provide proof of my base figures, then I discover that what I'm doing is not sufficient or even wrong, also whether I have to justify entries in a bank account as, in the past, I haven't always paid for things from the same account (this has always been a hobby thing). I thought that seeing how an accountant presents everything might show if I'm on the right track. I have looked online for examples of similar accounts but without luck.

    Thanks for the advice
  • Savvy_Sue
    Savvy_Sue Posts: 45,838
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    No problem with paying from different bank accounts, although life is simpler if all business stuff is in one place.

    HMRC won't look at your accounts. They just want the headline figures.
    Signature removed for peace of mind
  • martindow
    martindow Posts: 10,182
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    Another vote for being rigorous in recording expenses regularly.  If you leave it, you will forget to record small purchases and mileage.  These expenses tot up over the year.
  • Have a look at QuickFile, it’s free up to a certain amount of transactions per year and great for recording income and expenses. You can then run reports if you wish. Also they have an option to pay for an accountant to submit your accounts for a nominal fee although you shouldn’t need to do that if you record everything correctly. 
    28th April - MIP submitted and issued
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  • DullGreyGuy
    DullGreyGuy Posts: 9,210
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    uknick said:
    First question is are you cash based or accrual based?  I'm going to assume cash based from your post.  If you're accrual based it'll take more than a simple post to go through the ins and outs of that type of accounting.

    As you only need your total income and total expenditure for the tax return a spreadsheet will be fine.  I am an accountant and that is all I use for my sole trader accounts.  It's when you become a Ltd it significantly changes due to the additional reporting requirements.

    My best advice on how to manage your business transactions is don't let them build up. For example, do them every week.

    For sales make sure each one is recorded with its date and a unique invoice number in your spreadsheet.  This number should be on the invoice you give your customer.  Next to this add a column to record when and how much has been received.  This makes it a lot easier to chase for outstanding debts.

    Expenditure, just list the items you buy with what they are, the amount and date you paid the bill.

    It might be obvious to some, but you'll need the dates to close off each tax year you report.

    Finally, I wouldn't waste money on paying accountant regularly if your accounts are just adding up columns of numbers.  Having said that, a couple of hundred may be money well spent with an accountant as they can advice you on things such as if accrual accounting is better for you than cash.  They can also highlight additional items of expenditure you can claim for which you weren't before.   
    Thanks for the reply. I have always chosen the based figures, though in all honesty, I probably don't fully understand what that means. As all the sales are through ebay I don't have to bother with invoices, debtors or chasing late payers, ebay send a report of all transactions showing gross & net figures after deduction of their fees, so I assume that is enough. I keep a separate sheet for my expenses, which don't come to much. I presume you mean the dates the trading year finishes & the next one starts have to match.

    What I worry about is, if I'm asked to provide proof of my base figures, then I discover that what I'm doing is not sufficient or even wrong, also whether I have to justify entries in a bank account as, in the past, I haven't always paid for things from the same account (this has always been a hobby thing). I thought that seeing how an accountant presents everything might show if I'm on the right track. I have looked online for examples of similar accounts but without luck.

    Thanks for the advice
    its not clear if you want an accountant or an accounting package?

    At £20k revenue and as a sole trader I'm not convinced either are required with cash accounting. The trick to doing accounts is to stay on top of it. Much better to log things as you buy/sell them or at least very regularly if not instantly. It'll always be a pain if you decide to ignore it for a few months or longer and then have a big backlog to unpick. 

    With cash accounting, it's the simpliest, you note things into your P&L accounts as you spend/receive the money. So you buy 100 widgets today at £10 each you note it as £1,000 cost. If you started bulk selling off eBay and give someone 14 days to pay you only count it as paid when the cash is in the bank.

    With accrual accounting stock isn't a business expense until you sell it, when you raise an invoice it goes into your accounts not when you receive the money. Its more complex, can create cashflow challenges given you're paying VAT and Corporation Tax etc before monies is received potentially however there are some advantages too. 
  • SVaz
    SVaz Posts: 236
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    I use free agent,  it’s simple to use and you can upload your pre populated tax forms straight to your HMRC account.
    So as long as you upload the right information into freeagent, it does all the work for you. 
    You can also have a ‘virtual’ bank feed where you manually input payments,  good if you don’t have a business bank account.  I use a virtual feed for customers cash payments, alongside my paired business bank feed. 
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