To ensure we can offer you the best possible advice, it's important for you to handle your bookkeeping regularly. We recommend updating your records on a daily/weekly basis, but at the very least, please do so monthly. This helps us provide accurate and timely guidance based on the most current information.
If bookkeeping falls behind, it becomes challenging for us to support you effectively.
common transactions
Click the “+” icons on the headings below to see where you should post them in your bookkeeping software bank feed.
-
FreeAgent:
Add the expense to FreeAgent:
My Money > Expenses > Add New > Expense OR Mileage Claim
Then pay the money out of the company bank account and post the transaction in FreeAgent to:
Type: Money Paid to User
Payment To: Name of person receiving the expense payment
Category: Expense Payment
Xero:
There are multiple ways to do this depending on your specific circumstances. Contact us via email (support@millwardmay.co.uk) or phone (0118 380 0363) so we can talk you through it.
-
Make sure you have profits available in the company before paying out a dividend. Contact us via email (support@millwardmay.co.uk) or phone (0118 380 0363) so we can talk you through it.
FreeAgent:
Type: Money Paid to User
Payment To: Name of person receiving the dividend
Category: Dividend
Xero:
Who: Name of person receiving the dividend
What: Dividend
-
FreeAgent:
Type: Money Received from User
Payment To: Name of person you’re receiving the loan from (probably yourself)
Category: Payment to Director Loan Account
Xero:
Who: Name of person you’re receiving the loan from (probably yourself)
What: Director Loan Account OR Director Account
-
FreeAgent:
Type: Money Paid to User
Payment To: Name of person you’re repaying (probably yourself)
Category: Payment from Director Loan Account
Xero:
Who: Name of person you’re repaying (probably yourself)
What: Director Loan Account OR Director Account
-
First thing to do is pay the ‘net pay’ OR ‘take home pay’ figure on the payslip from the business bank account. This is not the same as the gross (before tax) pay
FreeAgent:
Type: Money Paid to User
Payment To: Name of person receiving the salary
Category: Net Salary and Bonuses
Xero:
Who: Name of person receiving the salary
What: Wages Payable
-
FreeAgent:
Type: Payment
Including: Auto VAT
Category: VAT
Xero:
Who: HMRC
What: VAT Payable
-
FreeAgent:
Type: Payment
Including: Auto VAT
Category: PAYE/NI
Xero:
Who: HMRC
What: PAYE Payable
-
FreeAgent:
Type: Payment
Including: Auto VAT
Category: Corporation Tax
Xero:
Who: HMRC
What: Corporation Tax Payable
-
FreeAgent:
Type: Payment
Including: Auto VAT
Category: Pension OR Director Pension
Description: Put the name of the person that the payment was made on behalf of (e.g. pension payment on behalf of John Smith)
Xero:
Who: Name of pension provider (e.g. Fidelity)
What: Pension OR Director Pension
Why: Put the name of the person that the payment was made on behalf of (e.g. pension payment on behalf of John Smith)
-
FreeAgent:
Type: Other Money Out
Category: Pension Creditor
Xero:
Who: Name of pension provider (e.g. Nest)
What: Pension Payable
General bookkeeping Advice
You need to attach receipts to expenses in the software. If its a physical receipt, I would suggest downloading the bookkeeping software app and taking a picture with your tablet or phone.
Try not to pay personal expenses through the business, but if you do (it happens!) please write 'Personal' in the description and post it to your director loan account. You will then need to repay the money from your personal account to the business account and post the money received in the company bank account to your director loan account too. The two payments will then offset against one another.
Add a description to the expense if it isn’t obvious what the expense is for (e.g. description: “business entertainment - meal with Tom Smith, our main supplier”).
Do not pay personal tax from your company bank account. If you need money to pay your personal tax bill, pay out a dividend from your business to your personal account and pay the personal tax from your personal account.
Speak to us before incurring any expenses that are out of the ordinary and may not be claimable as a business expense.
Categorise expenses as accurately as you can. If you don’t know where to categorise an expense, you can either:
Contact us to ask us where to post it to via email (support@millwardmay.co.uk) or phone (0118 380 0363).
Post it to “sundry expenses” and write a detailed description of what the expense was for so we can action it when completing your annual accounts.
VAT registered Businesses
If claiming VAT, please attach a valid VAT receipt. A VAT receipt has a 9 digit UK VAT number on it (e.g. 123456789 OR GB123456789). You will have to supply valid VAT receipts for any VAT you have claimed, if you are investigated by HMRC.
Don’t claim VAT on business entertainment.
If you do your own VAT returns, add a reoccurring entry in your diary so you don’t forget to submit it.
I would suggest setting up a direct debit through your business government gateway account so the VAT is paid automatically a few days after the VAT deadline date.
Use the correct VAT rate for different goods and services: tax rates.