Sole trader banking question

Son

Hi

Might seem like a stupid question but i've just started working for myself and i don't have an accountant yet.
When i get payed after a job is it best to lodge that money straight away or can i wait say 2 weeks and lodge it with money from other jobs in one go?
So what im asking is should i fill out a seperate lodgement slip for each payment or can i put the money together and fill out one lodgement slip?

is_that_so

It's your money so it's your choice. Banks like to see activity and they don't care what way you put it in. The only thing to consider is business accounts tend to be charged per transaction.

Son

Ok so once it all goes in it doesn't matter.I was just thinking about records,will it be easier if i do them seperately?
Its free for the for two years so don't have to worry bout charges yet

is_that_so

I asked an accountant about this when I started and all he said was to use one account for all business transactions. Much easier to keep track when you do sort out an accountant. In the meantime you might look at using Excel to keep track of things:Income Left/Outgoings Right side of worksheet. You could break your lodgements down there into constituent parts. As long as your "books" match bank statements then you'll be fine.

lanod2407

Personally I prefer to keep transactions separate for tracking purposes - but then again, I'm on free banking for another year, and I do not have many clients so the invoices and payments are not high volume.

If I had a lot of transactions coming in each week I'd think about doing it in batches.

Spreadsheet - set one up and track all of your transactions in and out, and categorise each one into the type of cost, etc. Also, I note when I pay an invoice, so that I can see how much I have to pay people at any stage, and therefore how much needs to stay in the bank.
I also track payments into my own account and into my tax account so that I can see how much is considered "salary" and if I've covered that with matching tax accruals. These things are really easy to set up, and can be a pain to maintain - just put 30 minutes a week aside. It also helps the accountant at the end of the year - I note which items I have an invoice / receipt for so that my accounts at year end are easy to reconcile.

Hope this helps. ..

blue4ever

I had that 'issue' I would store a few cheques and lodge them together. I found after a few months (if I was trying to see who paid what) the bank transaction was "Lodgement €x,xxx" one lump sum - sometimes it took a while to figure out what was in that number. I'd go for the separate transactions

niceirishfella

This thing that jumps right out at me is, CASH THOSE CHEQUES ASAP after you get them in this current economic enviroment.
You just never know.

Son

Right thanks for the advice,i will probably do them seperate for now to make it easier to track.

DubTony

Seperate lodgements make it a lot easier to track. Your lodgement dockets should have boxes where you can write in a reference. This reference shows up on your statement. So when you get paid for your very first invoice your reference could be "00001" and so on. Use the spreadsheet as well, or even better is to purchase an inexpensive accounting package like Sage, Big Red Book or MYOB etc. and record everything there as well as on the lodgement dockets. (Those programmes do your invoicing as well I think).

Be aware that sometimes free banking isn't completely free. They may allow you so many transaction per week or per month. Check it out.

Son

Was wondering what the reference was for,thanks.
I do plan on getting something like sage or big red book etc just i don't have that many customers yet so it easy to keep track,i could easily count the invoices so far :rolleyes:

Bethrifty

Lodge them separately
However for handiness if you want to lodge them together i would strongly advise you to keep a lodgement book - for your own and accountants records. Breakdown what each amount is for in the book.

PaddyTheNth

I would recommend Quickbooks ahead of Big Red Book.

I would also recommend as an absolute priority talking to an accountant about what you're doing - it will seem like a large initial cost with very little return at the moment, but getting your procedures straight from the start will save you so much pain in the long run.