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[1] Overview and regulations
The bookkeeping and accountancy system is based on the concept of a monthly recording and reporting system, (together with a monthly payable fee), that is used to produce the annual profit and loss account and any interim reports required.
This basic concept provides the client with a monthly up-to-date position of his business, and the agency operator with a regular monthly income.
The client maintains daily, weekly or monthly records, (according to his wishes), using a computer designed bespoke set of forms. He hands these forms, together with the pertinent receipts and other documents, into the agency on a monthly basis together with the monthly fee. These records are checked, errors corrected and put into the computer. The monthly reports are then produced automatically.
The monthly reports produced are :-
1. Monthly update of the profit & loss account.
2. Tax report.
3. Spreadsheet.
Reports (1) & (2) are sent to the client together with the prime documents. Report (3) is used as a hard copy back-up.
On average, 3/4 hour per month is allowed for each client, (excluding the initial interview). The routine maintenance of the agency takes about 10 hours/month. The average fee is £25/month. In the ongoing situation 200 clients will yield an income of £5000/month for about 48hours/week.
The system has been in use for over eleven years and has been found to be efficient and economic.
Index -
Four facets comprise the system - click for section :-
1. Tax regulations and legal requirements.
2. Internal office procedures.
3. Client manual record keeping.
Because the system is aimed at a very select, (but highly populated!), market the proportion of the total tax regulations in force that are applied in practice is very small. When we fill in our Income Tax Return we are made aware of this as the proportion of the form that is actually written on, (by most people), is very small.
The regulations applied in the sole trader business are mainly concerned with income, revenue expenses, capital allowances and personal allowances.
Of minor interests are, Enterprise Allowance Scheme grants, treatment of HP interest and VAT registered businesses.
It has been found in practice that the Inland Revenue officers are very helpful and readily give advice.
The system does not deal with VAT. Experience has shown that most people prefer to do their own quarterly VAT returns using the forms for the computer system described below. But, the agency has the option of extending its operation to include VAT returns.
These are of two types. Cash control - fees, bank and own accounts; and administrative - filing and logging of work done for clients.
Cash control is exercised through a simple loose-leaf ring binder system using forms designed to make it self operating.
The administrative procedure uses filing folders and wallets to give an easily understood and manageable system.
It is the inclusion of these into the system, that makes the whole a simple turnkey application.
3. Client Manual Record Keeping
At the initial client interview the headings that comprise the income and expenditure items are decided and these are entered into the computer.
The computer then produces daily, weekly or monthly forms for completion. It is for the client to decide what level of reporting he wishes to do and how much he wishes the agency to do. Of course, the less the client does the higher the fee to him. It is best to encourage the client to aim for his maximum ability, as this will give him a deeper involvement in his business.
Each month the client brings or sends his forms, prime documents and fee to the agency and these are checked. This takes five to fifteen minutes depending on the volume of paperwork and relates to a monthly fee of £15 to £30.
After checking, the details are entered, usually as a batch, with others, into the computer.
At the end of each client data entry, the computer prints out the monthly reports that are sent to the client.
There is also the facility to produce other reports as required.