I have a limited company but have yet to do any of the accounts. I have been reading a book on bookkeeping and was wondering if I could do cash accounting for a limited company? I have a feeling I can't and have to use double entry?

On a separate issue, if I were to pay someone for some work they have done do I simply write them a cheque for the amount/bank transfer or whatever. Or do I hold an amount back for tax? I have not paid anyone before from the business account.
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What exactly do you mean by cash accounting?

Double entry bookkeeping is the usual practice, if you can't handle it i suggest you hire an accountant.

if someones done some work for you you'd have to pay them according to the payment terms that were agreed or stated on the invoice, just make sure you keep the invoice
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Ondot ..... when you say done work for you, do you mean as in a supplier or employee?

:)
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What exactly do you mean by cash accounting?

Double entry bookkeeping is the usual practice, if you can't handle it i suggest you hire an accountant.

if someones done some work for you you'd have to pay them according to the payment terms that were agreed or stated on the invoice, just make sure you keep the invoice

The book describes a simple accounting system that keeps track of cash, income and expenditure and then goes on to describe double entry as another way to keep accounts.
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Ondot ..... when you say done work for you, do you mean as in a supplier or employee?

:)

As a employee. I don't want to pay him and find that I have paid him too little or too much. I can work out how to do it in the accounts later but I like to pay him as promptly as possible. As the proverb goes - he who gives quickly gives twice.
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You are talking about a simple cashbook for each of the ledgers. This will need to be translated into double entry to produce your accounts.

I suggest you look at a simple cashbook programme like VT Cashbook which will actually produce the double entry - don't try any keep manual books else you could end up in a right mess.
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If you have an employee you will need to make Employer NI payments.
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I like the sound of the program doing the double entry!

Do you know whether GnuCash is any good? (I am unable to supply a link until I have done 15 posts)

He did the work on a one off basis so I suppose he would be classified as a contractor?:|
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I like the sound of the program doing the double entry!



You will need to maintain the company accounts on an accruals basis and also use double entry to produce the balance sheet. Double entry bookkeeping is not a difficult concept but requires training and experience to operate it properly. To someone not experienced in accounting double entry can appear like a foreign language, to an accountant that is the way we speak, its second nature.

At DIY Accounting we do produce accounting templates for limited companies which keeps the bookkeeping entries quite simple and the double entry is all automated as is the production of monthly and annual accounts. It might be the solution for you.

Regarding employing someone, if you employ a bookkeeper or accountant they will probably be self employed and so you would pay them as any other supplier at the amount invoiced. If the person is not self employed but employed by your company then you need to register for the paye scheme, keep wages records and deduct income tax and national insurance from the gross wages. Plus you will also be liable to employers national isurance and need to give the employee a payslip.
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Thanks for the info Terry.

I would like to learn how to do the accounts myself. Once I have a reasonable competency at them then I will most likely out source it. I feel it is a skill a well rounded business leader should have.
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Before you get yourself in too deep, why not just sit down with a potential accountant/book-keeper and discuss your proposals. Most will offer their initial consultation free of charge.:)

It's one thing preparing a Trial Balance but altogether a different matter preparing accounts in a format acceptable to Companies House and HMRC. A well rounded business leader only needs to know how to interpret a set of accounts, which is quite different to preparing one (after of course taking account of the plethora of rules applicable).

As regards your original post regarding payment to individuals for work done that really does depend on the industry sector you're in. Does IR35 or CIS impact on your business? What is the employment status of your contractors as viewed by HMRC? HMRC have produced literally hundreds of pages of guidance in this area alone. Once you have grasped all that you can then look at VAT, Corporation tax, Depreciation , Dividends, Funding grants etc....

I have run my own Limited company for a number of years and previously came from an accounting background (qualified ICMA albeit 15 years ago). Despite a better than average understanding of the format of company accounts, I wouldn't even contemplate not employing an accountant.

Just my pennies worth.
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That is a good attitude as only by doing the books yourself does it put you on the inside of the financial performance. Outsource it when you need to but at that stage you would also know what you are expecting and what to look for in the numbers
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If you are looking for a FREE consultation, feel free to contact me :)
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