Bookkeeping software

Bookkeeping software

Bookkeeping software usually come with features which allow you to prepare VAT returns, management reports and your company accounts.

Choosing the Software

Depending on your business activities and bookkeeping requirements, a startup company may only require simple and straight forward bookkeeping software for recording business transactions. You can always upgrade your bookkeeping software to more sophisticated bookkeeping software as your business expand.

If you have different companies under your management. In this circumstances, a bookkeeping software with multi-company with multi-users license may be ideal.

Choosing suitable bookkeeping software can be time consuming and with the sweet talk from all software retailers could create confusion for you which software is the best suit your business accounting requirements. Always ask for a software demo or free trial the software for a period of time.

Generally, a good bookkeeping software comes with the following features.

Nominal ledger

Nominal ledger is where all the assets, liabilities, income and expenditure of your business are recorded.

Sales ledger

The list of customers who owes money to your business. The software will also be able to prepare monthly statements detailing the outstanding amounts. Some software has the facility to prepare and send a standard letter of reminders chasing payments due from customers.

Invoicing

Most software allows you to create a sale invoice. Every sale invoice created in your software shall automatically posted to your sales ledger.

Stock control

This is a stock management system allows you to monitor your stock level and keep track of your stock movement. If you are suppliers of building materials you may use stock control to monitor your materials in stock. As you purchase new stock they are added to the stock records. When a sale invoice is created it automatically reduces the stock items sold.

In this manner you can quickly establish if an item is out of stock and you know your cost of your stock. You are able to set standard profit margins which automatically update the selling price of materials based on the purchase price.

Purchase ledger

The summary of your suppliers that you still owes money to.

Order processing

This feature allows you to record orders from customers. It will allow you to create a quote, pro-forma invoices and the reservation of stock so that the items will be available at the appropriate time. You can then track them through, from producing a dispatch note and an invoice at the appropriate time.

Job costing

Allows you to work out the cost of a particular job that you are undertaking for a customer. As you enter the components used, the software calculates the cost of the items and the stock record automatically updated. Job costing can be useful in the calculation how much to bill your customers.

Payroll

Some software will support the calculation of wages and salaries for your employees and also work out the correct amount of income taxes and national insurance contribution payable to tax office.

Multi company license

This license facilitates the software to process the records of more than one company or business on the same access.

Multi user license

This license is ideal for larger businesses with a computer network which allow several users to have access to the same bookkeeping software at the same time.

Batch or real time input

Process transactions by batches. This can have advantages in that if your transactions are pre-listed and you have reconciled each batch. The batch remains open for the current month and it is only transferred to the nominal ledger at the end of the month. The disadvantages of such a system is that it is not possible to obtain meaningful interim reports until the batch is processed at month end. By contrast on a real time system each invoice is posted to the nominal ledger as it is entered and although this means that there are more ledger entries made automatically it means that the ledger is always up to date.

Password protection

Most bookkeeping software have some sort of passwords protection. You can have a global password for your software for every user or you can have a different password for each user. You can set different access rights for each user, for example, your sales department may have access to the sales programs but unable to access the nominal ledger or purchase ledger.

There are many bookkeeping software available for UK businesses such as Clearbooks provide online bookkeeping, VAT return, payroll processing and company accounts submission service. Other bookkeeping software include Xero, Sage, QuickBooks, Viztopia, Kashflow and so.

Understanding vocabulary in financial statements

Understanding vocabulary in financial statements

Understanding vocabulary in financial statements will help you to understand the report and figures presented in your financial statements and your company accounts.

These are frequently used vocabulary in your financial statements and company accounts.

Accounts

Accounts normally consists of profit and loss account, balance sheet, notes to financial statements and directors report. Accounts for companies registered with Companies House must be prepared according to Companies Act 2006 requirements.

Asset

Anything that a business owns; assets include buildings, cash, furniture, and equipment. Tangible assets subject to depreciation and the business is entitled to claim capital allowances on these assets.

Audit

A verification of accounting records and the audit approach is normally on samples basis.

Auditor

An individual not affiliated with the company being audited usually performs an audit. The person must be a registered auditor with the main accountancy bodies in order to qualify to perform audit on UK Company financial statements.

The professional accountancy bodies that issue auditing certificate for practitioners include The Institute of Chartered Accountants in England and Wales (ICEAW), the Institute of Chartered Accountants Scotland (ICEAS)or The Institute of Chartered Certified Accountants (ACCA) or other recognized professional bodies in the UK.

Capital

What the business is worth? Capital for limited companies are in the form of shares invested by their shareholders.

Credit

An entry on the right side of an account ledger.

Debit

An entry on the left side of an account ledger.

Ledger

A group of accounts of similar types. For example, debtors’ ledger containing the accounts of your business customers and creditors’ ledger containing the accounts of your suppliers.

Liability

Anything that a business owes; examples include mortgage, credit card charges, loans and bank overdrafts.

Petty cash

A small amount of cash for day to day office small expenses.

Trial Balance

Trial Balance shows expenses on the debits and income and loans on the credits and the ledger are equal.

Pay late filing penalty by installment

Pay late filing penalty by installment

Pay late filing penalty by installment must write to Companies House to propose your late filing penalty payment plan and Companies House will review your proposal and will let you know if they approve your request.

This is the best way forward if your company is unable to pay the late filing penalty outright.

You must write to Companies House for the request to pay your late filing penalty by monthly installment. You must explain why you cannot pay the late filing penalty by due date.

Companies House will issue automatic late filing penalty for filing your company accounts late even just by one day. You must not ignore your late filing penalty just because you don’t have the money to pay outright because Companies House will escalate your case to a debt collector and enforce the payment through court and this can become even more expensive later.

Re-register from private limited company to public limited company

Re-register from private limited company to public limited company

Re-register from a private limited company limited by shares to a public limited company (PLC), your private limited company must pass a special resolution.

Your company must complete the Companies House form RR01 for your application to re-register your private limited company as a public limited company. The form must be delivered to Companies House together with the following legal documents.

  • A copy of the special resolution
  • A printed copy of the amended articles of association
  • The balance sheet
  • Your auditor’s written statement
  • Your auditor’s unqualified report
  • Copy of the valuation report if recent allotment of shares for a non-cash consideration
  • Statement of the proposed secretary to be included If your company do not have a secretary.
Company seal

Company seal

Company seal is an official seal used by limited company to endorse official status to formal contracts, lease agreements and share certificates. A company seal is also known as corporate seal or common seal.

If your company is required to have a seal as spell out by your Articles of Associations, the use must be authorised by your company directors.

Usually, your Articles provide that affixing of your seal must be witnessed and evidenced by the signature of your director and your company secretary.

Now, the signature of your company director, or a director and your company secretary, signing for and on behalf of your company has the same effect as if the document had been executed under seal.

You may require a company seal if conducting business abroad or entering into contracts with overseas customers or suppliers, their legal representatives may require that your company affixes an official seal to the commercial contracts.

Many companies still use a seal to execute official documents in the United Kingdom. This is because its use is perceived as a strong authority in signifying a genuine document.

There are many types of company seal you could buy in the United Kingdom for your limited company. There are HPI Plier range and LWI embossers. They produce high quality imprints on paper up to 120gsm.

Each of this embosser and plier comes with a standard circle layout with your company name and registration number. You may ask the manufacturer to include your company logo in your embosser or plier for an extra cost.

Re-register from private limited company to unlimited company

Re-register from private limited company to unlimited company

Re-register your private limited company to unlimited company under the Companies Act 2006 the application must be delivered to Companies House.

You must complete the Companies House form RR05. Send your application with the following to Companies House.

  • A prescribed form of assent.
  • A printed copy of the amended articles of association.

The form of assent is a document evidencing agreement from all shareholders (members) with your proposed re-registration from a private limited company to unlimited company. The form of assent must be authenticated by or on behalf of all the members of your company.

Don’t forget the statutory fee payable to Companies House for your application to re-register your private limited company to unlimited company. Your application will not be processed without the fee.

Re-register from unlimited company to private limited company

Re-register from unlimited company to private limited company

Re-register from unlimited company to private limited company is allowed under the Companies Act 2006.

There are two types of private limited company, your unlimited company could re-register to.

  • A company limited by shares
  • A company limited by guarantee.

The re-registration involved your company directors to pass a special resolution.

You must complete the Companies House form RR06 for the application to re-register from unlimited company to private limited company. You must include the following important documents with your application to Companies House.

  • A copy of your special resolution
  • A printed copy of your amended articles of association.
  • Statement of capital if your re-registration is to a company limited by shares.
  • Statement of guarantee if your re-registration is to a company limited by guarantee.
Re-register from public limited company to private limited company

Re-register from public limited company to private limited company

There are different ways for your public limited company (PLC) to re-register as a private limited company under the UK company law.

By passing a special resolution

Your public limited company must complete the Companies House form RR02 and deliver it to Companies House together with a copy of the special resolution and a printed copy of the amended articles of association.

If there is an objection to the re-registration from public limited company to a private limited company from the shareholders, the shareholders must inform your PLC of their objection. Your PLC will then notify Companies House by submitting the form RR03.

At the same time, your shareholders can apply to the court to cancel the resolution within 28 days of the passing of the resolution. The Court may either cancel or confirm the resolution after the hearing. The court’s decision must be communicated with Companies House within 15 days of the order being made.

Section 100 of the Companies Act 2006 provides further information about this method of company re-registration.

A court order to reduce capital

The court can order your public limited company to re-register as private limited company where your public limited company has applied to the court to reduce its share capital and this results in the nominal value of your allotted share capital falling below the authorised minimum for a public limited company, the court can authorise your company to be re-registered as private limited company without the need to pass a resolution.

You must complete Companies House form RR08 in this circumstance and deliver the form together with a copy of the court order and a printed copy of the amended articles of association to Companies House.

Following a cancellation of shares

Your public limited company must re-register as private limited company if following a cancellation of your company shares results in the nominal value of your allotted share capital falling below the authorised minimum for a public limited company. Your company directors can pass a resolution to re-register as private limited company.

In this instant, your company must complete the Companies House form RR09 accompanied by a copy of your director’s resolution and a printed copy of the amended articles of association and submit this application to Companies House.

After re-denomination of shares

Your public limited company may re-register as private limited company following a reduction of capital due to a re-denomination of shares if your share capital falls below the authorized minimum for a public limited company.