Accountants for Contractors

Finding the best Accountants for Contractors

Finding the best accountant for yourself can be hard enough. Finding the best accountants for contractors can seem like a near impossible task. When you are just starting out, you may not be entirely sure of what you are doing or what you should be looking for. This isn’t made any easy by the number of accountants nowadays who make big claims that they provide the best service and guarantee ways of increasing your business profits easily. All of the claims are displayed unashamedly on their adverts and websites but when it comes to delivering on those promises they quickly make excuses and blame something out of their control. Some of them just make excuses and try to pass along the blame, others simply just dodge your calls for a while before giving you some bad advice. Regardless what happens, almost everyone has had a bad experience with their accountant but that doesn’t mean that you have to too.

How to choose the best Accountants for contractors?

If you are looking for a new contractor then there are some common mistakes that people often fall into that can greatly affect their experience and how effectively and efficiently their accounts are dealt with. A common mistake that people make is the assumption that all accountants are able to carry out the same job. This is very wrong. What we mean is that some accountants will be better and more equipped at dealing with larger clients such as institutions and business, others will specialise with individuals or as accountants for contractors. Another factor to consider is that some accountants will happily take your accounts, complete and organise and give them back to you without the need of any effort on your part. Others will prefer you to be more involved and require you to answer many questions about what you need of them. If you are happy to just send in your information and have someone else sort it then you may prefer an online accounting firm. If you would prefer to be more involved then you may prefer a smaller firm with a physical office.

What you need to consider

Even once you have taken everything into consideration, finding the best accountants for contractors is still a very hard thing to do. the best accountants for contractors will specialise in specific things such IR35 completion and compliance. Some accountants for contractors should also specify whether they will work directly with Umbrella companies or just with the contractor themselves. Do they simply claim that they are accountants for contractors or are the dedicated specifically to contractors? Failing to consider or acknowledge the importance of these things is almost guaranteed to cause a lot of headache in the future. If you are a contractor and you fail to submit you IR35 then you are liable to face extremely hefty fines and even prosecution! This is why it is imperative to find the best accountants for contractors in order to save yourself money and time.

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How accounts are balanced ?

We have learned about the journal, journalising, ledger, ledger posting and expenses, now we will learn How accounts are balanced.

After posting is completed, the various accounts are balanced.

Procedure of Accounts balancing

  1. Find the difference between the debit total and the credit total of the account.
  2. Put difference on the smaller side so that the two sides become equal.Then put the totals on both sides. Before writing the total draw a single line and after the total draw double lines. The two totals must be placed in two columns opposite each other.
  3. When difference is put on the smaller side, write Balance carried down in the particulars column, against the balance amount. This is the balance of the account on the particular day.
  4. On the next day the balance is brought down on the opposite side, and the account is continued with this balance.

Real Account Balance:

Real accounts relate to assets, when assets are purchased, the particular assets account debited, and when assets are sold  or disposed off, the particular assets account is credited. So if an asset account has a balance it must be a debit balance. It indicates the value of asset in the possession of the business.

Personal account balance.

The debit balance of a personal account indicates debts owing by the person and credit balance indicates debts owing to the person concerned. For the business, the first is account receivable or asset while second is account payable or liability. The debit balance of all personal accounts on a certain date put together will make Sundry Debtors and the credit balance of all personal accounts Sundry creditors. Sundry Debtors are asset and sundry Creditors are Liabilities. Where as Asset Accounts have debit balance liability accounts have Credit balance.

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What is a cash book format of a cash book?

The cash book is the most important subsidiary book in any business concern. It is used to record cash transaction in which cash is received or in which cash is paid is known as cash transaction. When cash is received cash account is debited, and when cash is paid cash account is credited in the journal. The other account involved is either debited or credited as the case may be. But it is not necessary to journalise each cash transaction, when a cash book is maintained. All cash transactions are are first entered in the cash book. The cash book has two sides, a receipt side or debit side and a payment side or credit side. All receipt of cash are entered on the debit side. While all payments of cash are entered on the credit side.

Form of Cash Book

The usual form of simple cash book is given below. It can be seen that cash book is simply a cash account when a cash book is maintained a separate cash account need not to be opened in the ledger. The cash book may be balanced just as any other ledger account. The balance represents cash-in hand which should tally with actual cash with the cashier. Thus the cash book serves two purposes

It is a subsidiary book, a book of original entry.

It is a principal book or book of final entry as it serves the purpose of ledger account as regards cash.

How to record receipt and payment in cash book?

When cash is received

When cash is received a receipt is prepared in duplicate or a counterfoil receipt is written up. The original is sent to person giving the cash and the duplicate or counterfoil retained in the office. Every receipt is serially numbered. On the basis of the duplicate receipt or the counterfoil, entries are made on the debit side of the cash book.Whenever cheque or bank draft or postal order is received it is treated as a receipt of cash.

When cash is paid 

When cash is paid to the person receiving the cash issues a receipt. This is the evidence for the payment and is known as voucher. Every voucher is serially numbered. On the basis of these vouchers, entries are made on the credit side of the cash book. The balance of the cash book will always be debit and represents cash in hand. It cannot have a credit balance because we cannot pay more than what we have received.

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What is a direct expense? Examples of direct expenses

Direct Expenses are expense which are directly involved in the production process in case of manufacturing or selling process in case of a trading business.

In calculating cost of the goods sold or cost of production it is necessary to include all expenses directly attributable to putting the goods in a saleable condition. For Instance,When Goods are purchased the carriage inward on such purchases is sometimes payable by the buyer.He may also be required to pay freight,duty,clearing charges,dock dues,on imported goods. All these are a direct expense on purchases and must be included in the cost of such purchases. Similarly, a manufacturing business incurs expenses on labour that is wages, on power,and various other expenses like , factory rent, lighting for the purpose of production. These are also a direct expense incurred for putting the goods in saleable condition.All direct expenses, both on purchase and production will increase the cost of goods.

The following are examples of Direct Expenses in case of a trading Business.

  1. Purchase of goods for sale.
  2. Freight Involved in the purchase of goods.
  3. Wages to trading staff.
  4. Godownor shop rent.
  5. Electricity for go-down & shop
  6. God-own & shop insurance

The following are examples of Direct Expenses in case of a manufacturing Business.

  1. Purchase of raw material
  2. Purchase of consumables for machineries.
  3. Transportation & Freight involved in purchasing raw materials and consumables.
  4. Factory electricity & lighting
  5. Wages to factory labours.
  6. Factory rent in case of rented building.
  7. Maintenance charges to Machinery and factory building.
  8. Factory Insurance
  9. Depreciation of Machinery & Amortisation Building.

Before going any further it is important to recognise that this article only scratches the surface of direct expenses and there is actually much more to it than meets the eye.

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