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Entries for previous tax year
I have a number of transactions in my business bank account, now mirrored in FreeAgent, which refer to the previous tax year. How should these entries be categorised so that they do NOT affect the Tax/NIC calculations for the current tax year?
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Inappropriate?Hi Richard,
FreeAgent should pick up the entries referring to the current tax year only, under the Taxes > Self Assessment and Accounting > Profit and Loss pages. Is this not happening please?
Kind regards,
Emily -
Inappropriate?Hi Emily
These two reports are not showing the entries for the previous tax year as they are categorised as Payment > PAYE/NI. But this is due to the fact that any entries categorised in this way are not shown on these reports.
However if I run the report "PAYE and NI Summary for Tax Year 2009/10" I see all entries I have made as Payment > PAYE/NI, some of which cover my last financial year. This obviously does not give the correct picture for this financial year.
A solution is to add a financial year to every item, defaulted to that of the date of the item. For the two entries, I have referring to the previous financial year, I can select this financial year and not the current one.
To conclude, you are correct but only because of the way the entries have been categorised.
To clarify the two entries in question: one is a PAYE/NI refund for 2008/2009 credited on 27/07/2009 and the other is the PAYE/NI settlement for 2008/2009 paid on 21/04/2009. I could remove these entries from FreeAgent but this would mean that my bank statements and FreeAgent will not tally.
Regards
Richard -
Inappropriate?Hi Richard,
I think the reason why you can see those two entries is because they were paid/received in 2009/10.
I would leave them as they are in FreeAgent, perhaps with a note to your accountant (if you have one) explaining the two entries as you've done here.
Does that help please?
Kind regards,
Emily -
Inappropriate?Hi Emily
I do wish to leave these entries in FreeAgent as they were paid in the current financial year although they do relate to the previous year; FreeAgent then matches my bank statements.
However, by remaining in the current financial year, these entries do appear in some of the reports and mislead the figures displayed. For example the balance sheet report.
Best regards
Richard. -
Inappropriate?Hi Richard,
When you say they mislead the balance sheet - I'm not quite with you there?
Presumably you have a brought forward figure on your balance sheet showing money that was due to/from HM Revenue at the start of 2009/10? The payments you mention would clear that brought forward figure, so it is correct to have them showing there.
Do you agree with that please?
Kind regards,
Emily -
Inappropriate?Hi Emily
I can see where you are coming from but I thought that the entries in my FreeAgent bank account should be an exact copy of my actual bank account. Should this not be the case?
Best regards
Richard -
Inappropriate?Hi Richard,
Yes, you're right, it should.
Where I think the confusion lies is that I'm not talking about your bank account in FreeAgent, but about the PAYE/NIC account on the balance sheet. "Account" in this context doesn't just mean "bank account", it means any account (so any line) on the balance sheet.
The two transactions we're talking about (the refund and the payment) would go into that account on the balance sheet, so that if you click that account on the balance sheet, you see them there.
But there should also be a brought forward figure in that PAYE/NIC account, showing what you owed to HM Revenue at the start of your accounting year. Those transactions will go against that.
I think it sounds like you've done everything right and you don't need to worry. You've put this year's transactions in correctly. The only thing you might not have done is to put a balance brought forward on the PAYE/NIC account, but you might prefer to leave that for your accountant.
Does that help please?
Kind regards,
Emily -
Inappropriate?Hi Emily
I think the mist has cleared! How do I put a balance brought forward on the PAYE/NIC account? I suspect I will need to do the same for the Director's Loan Account too where I repaid the balance within this financial year.
Best regards
Richard
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Inappropriate?Hi Richard,
To put a balance brought forward (as at your FreeAgent start date) on the PAYE/NIC account, go to Settings > Opening Balances and put the balance in.
If the opening figure is money owed to HM Revenue by you, put that in as a plus. If it's money owed to you by HM Revenue, enter it as a minus.
The Director's Loan Account opening balance goes under Settings > Users and click on that director.
I hope that helps but don't hesitate to ask if you do get stuck with that.
Kind regards,
Emily -
Inappropriate?Hi Emily
Managed to change the Director's Loan Account opening balance but I do not have the option Settings > Opening Balances just the 4 options Company Details, Country Options, Company Logo and, API and Feeds.
Best regards
Richard -
Inappropriate?Hi Richard,
That probably means your accountant has restricted your user permissions. You need to ask them to extend it (they will need to go to Users, click on your name and drag the permissions bar further over to the right).
Or your accountant may want to put in the opening balance him- or herself.
So you do then need to speak to your accountant about this.
Kind regards,
Emily
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