Checklist 2 – what piece of paper goes where
This checklist helps you decide where each piece of paper should go if you get stuck. Then read the relevant section you’re guided to see how the entry should be made and cross refer to the example pages.
1. You raise a sales invoice.
– Write it in the sales book.
– File it in an unpaid sales invoice file.
2. You receive payment for a sales invoice.
- Mark the invoice as paid in the sales book. Write in the date it was paid and in what account you banked it.
- Write the paying in book details in the bank receipts book.
- Refer to the sales invoice or the sales book in order to analyse out the VAT on the sales invoice in the bank receipts book.
- File the paid invoice in invoice number order in the paid sales invoice file.
3. You receive an invoice from a supplier, which you will pay for with a business cheque.
– File it in the unpaid invoices file.
4. You pay a suppliers invoice by a business cheque.
- Write the cheque details in the bank payments book.
- Work out the VAT included in the payment by checking with the suppliers invoice. Show this sum in the bank payments book VAT column.
- Analyse the value of the invoice in the appropriate column in the bank payments book. The net value is the amount less the VAT. So if the amount paid was £100 and the VAT was £14.89 the amount to be analysed in the remaining columns would be £85.11.
- Give the invoice a consecutive reference number and file in the paid invoices file in number order.
5. You pay for an item by cash.
- Write the details in the petty cash book.
- Analyse out the VAT if appropriate. See details of how to work this out in the petty cash section.
- Give the receipt or voucher a reference number.
- File the receipt or voucher in a separate petty cash payments file.
6. You pay for a business item by cheque from your personal bank account and you also have a business bank account.
– Follow the description of the section (5) on cash payments. A credit card payment is treated in the same way as a cash payment.
7. You pay for a business item with a business or personal credit card.
– Follow the description of the section of the section 5 on cash payments. A credit card payment is treated in the same way as acash payment8. You receive a statement from a supplier.
- Check your unpaid invoices file to make sure that the suppliers statement is correct. It is only correct is the supplier agrees that the same invoices are unpaid as you think are unpaid.
- If the supplier shows that some are unpaid and you have recently sent a cheque for those items, don’t worry. This difference will work itself out in time.
- If the supplier shows invoices unpaid that you don’t know about ask for copies immediately. This is the only you can see whether they have made a mistake or not.
- When you’re happy that the statement is reliable you can file it with the paid invoices in the paid invoices file if you wish.
- You do not have to make any entry in any of your books.
- Most statements have a detachable remittance advice included on them you may want to detach this and send it with any payment you make to help the supplier see what you have paid and keep their records straight. This can ultimately save time.
9. You send a statement to a customer.
– File it in a separate file or at the back of your sales invoice file.
– Do not make any entry in your books
10. You receive a credit note from a supplier.
- If you receive a credit note before making payment you should file it in the unpaid invoices file with the appropriate invoice. When you make payment of the net remaining amount you owe you should ensure that the VAT shown in the VAT column of the analysed bank payments book is the net amount of the VAT shown on the accompanying credit note. This should be true for the total and net figures too. So it the gross figure on the original invoice was £235.00 and the credit note was for a gross value of £45.00 then the gross value entered in the bank payments book would be £190.00, and so on.
- If you receive a credit note from a supplier after you have made payment and this is a regular supplier then you can net the credit note off against a later invoice and the arrangement in the preceding paragraph can be used
If you receive a credit note after payment has been made from someone who is an occasional or one off supplier. Then you should receive a refund from the supplier. The best way to write this into your books is to treat is as a sale receipt. It isn’t of course, but it looks like one from the point of view of banking. So include it in the sales column. Write a big note next to it to explain what it was, so you, we know and the tax authorities know.
11. You raise a credit note to a customer.
- Enter it in the sales book but mark it as a credit note and write it in brackets or red ink.
- Staple the credit note to copy of the invoice to which it relates..
- Give the credit note its own number, but this can be in the sales invoice number sequence.
- When you receive payment of the original invoice less your credit note cross-refer the receipt of money to both the original invoice and the credit note. The amount of VAT included is that on the original invoice less the amount of VAT on the credit note.
12. You receive a delivery note or an order form from a supplier.
– Staple it and file it with the invoice when it arrives.
– Do not make any entry in your books.
13. You receive your bank statements.
Check it. What you’re trying to find are:
- entries that are in your books that are not on the bank statement,
- and
- entries on the bank statement which are not in your books.
You’re also looking for items where there are differences, e.g. the figure on the bank statement is slightly different from the one you recorded. This sometimes happens due to human error.
Enter any payments made through the bank not paid by cheque in the bank payments book. These will be things like:
- Direct debits
- Standing orders
- Bank charges
- Bounced cheques
- Correct any errors you find in your records as a result of checking with the bank statement.
14. You pay an employee’s expense claim.
- Analyse the expenses in the petty cash book.
- Write the amount of the cheque in the bank payments book in a “petty cash” column.
- Analyse the VAT in the petty cash book and file supporting vouchers for the claim with petty cash vouchers. If the vouchers are made out to the employee and not to the business there is some doubt as to whether you can claim back the VAT and it may be best not to do so.
15. You pay an employee.
- It is outside the scope of this book to discuss PAYE in detail. You should however have a PAYE scheme. Talk to us about this.
- Enter the net pay in the bank payments book in a column called “employee wages”
16. You pay the employee’s tax.
– Enter the amount paid in the bank payments book in a column called “Inland Revenue”.
17. You pay HM Customs & Excise your VAT.
- Enter the amount paid in an analysis column in the bank payments book called “Customs & Excise”.
- Do not enter the payment in the VAT column in the bank payments book
18. You pay yourself.
– Enter the amount in a column in the bank payments book called “payments to/for self”.
19. You pay your own tax to the Inland Revenue.
– Write the amount paid in a column in the bank payments book called “payments to/for self”. This should be annotated with a description that it is your own tax. Alternatively, enter it in a separate column if you have room.
20. You pay your own National Insurance.
– National Insurance is tax and is treated in the same way as tax is in the preceding paragraph.
For further information, please contact us on 03332 401 333 or email enquiries@kirknewsholme.co.uk
