Emily's dashboard

Hello Celine,

No problem at all. If you get stuck with anything else then please don't hesitate to ask.

Kind regards,

Emily

Hello Celine,

OK, there are a few issues here.

Firstly, just for your information, you can in fact enter pre-registration bills that you can claim the VAT for into FreeAgent as a normal bill - so long as they are within the time limit as set by HM Revenue and you put VAT on them, FreeAgent will pick them up.

Secondly, what HM Revenue expect you to do if you get a VAT return wrong is not to correct and re-do that VAT return - it's to correct the mistake on the next return (unless it's over £10,000 worth of VAT in which case you have to write to them separately).

But I can understand why you did it that way, in order to make your credit card reconcile. And so long as you can explain it to a VAT inspector if you get a visit, then you should be fine.

What I would do now, then, is to manually adjust the figures on the next VAT return you do, so that this return and your last return "net off".

So for example:

Your return to 30 Nov 09, when you initially prepared it on FreeAgent, showed a refund due of £1,000.

You submitted that to HM Revenue and they have paid you £1,000.

But then you edited your FreeAgent VAT return and it now shows that you were actually due £1,250.

When you prepare your next VAT return, once you've got the figures from FreeAgent, you'd need to add £250 to the figure in box 4 (and therefore the figure in box 5 would also be different).

So let's say that FreeAgent, for the quarter to the end of February 2010, showed that you should be paying £600.

You take those figures and edit them outside of FreeAgent (don't try and change the February return in FreeAgent). Once you've taken the £250 off, you're left showing that you should pay £350 - so you pay £350.

These two returns would then "net off" like this:

Filed return to 30 Nov 09 shows (£1,000) refund
Filed return to 28 Feb 10 shows £350 payable
Net amount (£650) refund

FreeAgent return to 30 Nov 09 shows (£1,250) refund
FreeAgent return to 28 Feb 10 shows £600 payable
Net amount (£650) refund

So the two amounts net off and at the end of February everything is square.

Does that help, please?

Kind regards,

Emily

Hello,

Our answers crossed in the post there!

Don't worry, you're not an idiot at all and, as you say, your question may well help other newbies who aren't sure how to do this.

If you get stuck with anything else please don't hesitate to ask.

Kind regards,

Emily

Hello,

Don't worry, there is a simple way to do this.

Click on Banking, and on the menu under the graph, click on the account that has a gold star next to its name (this is the primary bank account).

You'll see on this screen your bank details - and a tick box saying "Show these details on invoices".

Untick this box and save your changes.

Your draft and future invoices will then not show your bank details.

Does that help please?

Kind regards,

Emily

Hello,

Stuart is quite right - if the laptop was in the accounts as a capital asset (which from your second point, Wolf, it sounds like it was) then you do need to show the proceeds from the insurer as disposal of that asset.

If it were treated as an expense then you could either show the proceeds as a credit to insurance, or as a credit to the "Computer Equipment" or "Computer Hardware" account.

Thanks for jogging us along about the problems you've been having, Wolf - we are aware that there are issues we need to straighten out with the tax computation and capital assets pages, and will get those done for you as soon as we can.

Kind regards,

Emily

Hello Wolf,

Different accountants would answer this question in different ways!

Personally I'd be quite happy to see it as a credit in your insurance transactions, but your own accountant (you're one of Stuart's clients, am I right?) may disagree.

So I'd probably suggest you check with Stuart and see what he thinks.

Kind regards,

Emily

Hello Kevin,

Another thought - if you should have historically charged VAT on postage then strictly speaking you're liable to pay that VAT over to HM Revenue even if you didn't charge it to your customers...

Sorry to be such a harbinger of doom :-(

Kind regards,

Emily

And further to my message yesterday, we're glad to say that FreeAgent has now been updated to be ready for the change.

Kind regards,

Emily

And further to my message yesterday, we're glad to say that FreeAgent has now been updated to be ready for the change.

Kind regards,

Emily

Hello Kevin,

I know - VAT is a minefield! The number of little rules and loopholes just beggars belief.

If you have any further queries please don't hesitate to ask.

Kind regards,

Emily

Hello Kevin,

OK, I'm with you now.

You need to record these receipts by dividing up the receipt into the VAT-able and non-VATable elements (if the postage is indeed non-VATable - see below).

So using your above example, you would receive a total of £15.98 (£11.99 + £3.99).

When you explain that receipt, overtype the amount in the Value box with the VAT-able element, so in this case, you'd overtype the £15.98 with £11.99.

Explain it with type Other Sales Income and set it to have VAT of 15% (or 17.5% when the rate changes) included.

FreeAgent will then put in a second unexplained receipt for £3.99, the amount you haven't yet explained, the amount of the postage.

Explain this as Other Sales Income too but this time set the VAT rate as 0%.

Do make sure though, that you shouldn't be charging VAT to your customers on the postage. I have done some research on HM Revenue's website and am concerned that you maybe should be charging VAT;

http://www.hmrc.gov.uk/vat/forms-rate...

If you look at the section on postage, you'll see that "Postage, packing and delivery within the UK included in the sales contract but charged for separately, eg mail order" is charged to VAT at the same rate as the goods or services being posted - and "Postage, packing and delivery within the UK charged as an optional extra is always standard-rated".

So I would double-check with your accountant as to whether you should in fact be charging your customers VAT on the postage.

Does that help, please?

Kind regards,

Emily

Hello Luke,

Further to my earlier message, HMRC have now announced the new rates which you can find here

http://www.hmrc.gov.uk/pbr2009/pbrn33...

We will of course be updating FreeAgent for these.

Kind regards,

Emily

Hi folks,

Good news - HMRC announced the new VAT flat rate percentages today.

You can find them here:

http://www.hmrc.gov.uk/pbr2009/pbrn33...

We will of course be updating FreeAgent for these.

Kind regards,

Emily

Hello,

Could you please clarify, are these invoices you're giving to your customers (so you're creating them under Work > Invoices in FreeAgent), or are they invoices you're receiving from your suppliers (entered under Bills), or payments you make out from your bank account (explained as Payment in Banking)?

You mention selling items, which indicates sales invoices - but then you mention creating an explanation, which sounds more like payments out.

I just want to make sure I don't give you the wrong advice!

Kind regards,

Emily

Hello Olly.

You could, in fact, work round this problem by splitting the bill up and entering it as several different bills?

So for example, if you had a bill for £2,000 of which £500 was one asset (e.g. your camera), £1,000 was another asset (e.g. your lights) and £500 was consumable items like cables and so forth, instead of entering one bill for £2,000 you'd enter three.

One for £500 and categorise it as Purchase of Capital Asset and put in the description that this was the camera, then a second for £1,000 again a Purchase of Capital Asset described as the lights, then a third bill for £500 and explain as something like Computer Hardware or Office Equipment (both of these are P&L codes in FreeAgent, and that, as you've correctly identified, is where consumable items like cables go).

Then, when you pay the bill, you would need to divide the bank transaction up too, into three different Bill Payments each for the correct amount (please do ask if you need a note of how to do this).

And there you would have it - multiple assets and consumable items from the same bill.

Discounts are a whole other accounting issue again! But I've checked the accounting standard that applies to fixed assets and it states that you need to use the post-discount price for the cost of the asset.

Does that help, please?

Kind regards,

Emily

Hello Paul, and welcome to FreeAgent!

There's nothing to stop you using a start date in the future (I've just tested that by setting up a new company with a future start date, just to make sure).

So you can indeed start using the system now. But there will be things you can't do simply because you won't know the figures yet or because they haven't happened yet, e.g. upload bank transactions, create sales invoices (other than dummy ones), put in your opening balances.

And also, a lot of the reports show "current year so far", and these will be empty because the data will all be dated in the future.

So it's entirely up to you whether you'd like to;

a) use a different start date (e.g. do a half-year from November 2009 on FreeAgent), or
b) set up now with 1st May 2010 as your start date, or
c) wait until 1st May 2010 has passed so you can begin your bookkeeping in earnest.

Kind regards,

Emily

Hello Ian,

No problem at all. If you get stuck with anything else please don't hesitate to ask.

Kind regards,

Emily

Hello Ian.

Here's how I would handle these transactions, given that there isn't yet a "fraudulent transaction" category in FreeAgent;

1) The initial withdrawals
Explain these with type Other Money Out, and category Payment to Contra Account.

2) The refunds from your bank
Explain these with type Other Money In, and category Receipt from Contra Account.

That way those transactions will net off and not affect your business's books.

Does that help, please?

Kind regards,

Emily

Hello Luke,

Don't worry, we've got the VAT rate changes firmly in sight and will make sure FreeAgent handles them smoothly, once HM Revenue have published the new rates.

We are watching their site closely and will pick the new rates up as soon as they're available!

I hope that puts your mind at rest?

Kind regards,

Emily

Hello Luc,

Further to my earlier reply, I would add to this that at the moment the Self Assessment tax calculations in FreeAgent are intended as a projection and a ball-park figure, to give you an idea of what tax is due. This is why the system doesn't produce Self Assessment forms.

We do, though, understand that the more accurate this area is the more valuable it is to our users, which is why it's good to get feedback like this so that we can improve its accuracy.

Thanks again for taking the time to report this to us.

Kind regards,

Emily