Accountancy for beginners

Introduction

Let's face it: one person likes bookkeeping more than the other. There are even people who like bookkeeping so much that they have made it their profession .... Most people who read this kind of documents are looking for a substantial saving of the opaque costs charged by external bookkeepers and accountants. They are often dissappointed. Accounting is not really complicated, but sometimes a lot - but above all - very precise work. This means that you will save costs, but that you will return a piece of your free time in return. (you probably already do that) Fortunately, there are now good computer accounting programs on the market such as e-Captain, who can take care of much of the time-consuming work.

In this basic course we will explain the main lines of (computer) accounting. No in-depth stories about strategies, we do not give you tips on the type of business you should choose and we do not explain how you can save as much tax as possible - you really need to be with an accountant for that. Bookkeeping is closely related to reporting: many associations, foundations and entrepreneurs only keep accounts because they are obliged to inform the tax authorities of their actions: sales tax, income tax, corporation tax, you probably know them. Of course, for tax reporting, some tax expertise is necessary outside of accounting knowledge. So you must of course know whether certain costs are now or not deductible. And you will immediately find a large part of the costs of your accountant and / or accountant: we may assume that it already assesses at the time of booking whether the costs you have incurred are distractible. He then immediately parks these costs to the correct cost account. In other words: even if you do your accounting yourself, it is wise to have your work checked by a "real" accountant or accountant. You prevent a lot of trouble with a possible book inspection by the tax authorities ...

Note: in this document we assume that you are going to book with e-Captain. In many cases, the program takes difficult pieces of work off your hands: calculating sales tax (VAT), dividing sales over debtors, and so on. It will all become clear to you later. It is not that we have the illusion that after reading these pages you are an accomplished accountant. We only try to guide you a little bit in the terminology.

If you really want to know the sissy of the stocking, a bookkeeping course is the right path. DISPI bv takes care of this for the e-Captain software. If you would like to know more about this, please contact DISPI bv, the creators of e-Captain, on 073-6141407. And of course your own accountant or one of whom we know that they already work with e-Captain.

In this basic course we will explain the main lines of (computer) accounting. No in-depth stories about strategies, we do not give you tips on the type of business you should choose and we do not explain how you can save as much tax as possible - you really need to be with an accountant. Bookkeeping is closely related to reporting: many associations, foundations and entrepreneurs only keep accounts because they are obliged to inform the tax authorities of their actions: sales tax, income tax, corporation tax, you probably know them. Of course, for tax reporting, some tax expertise is necessary outside of accounting knowledge. So you must of course know whether certain costs are now or not deductible. And you will immediately find a large part of the costs of your accountant and / or accountant: we may assume that it already assesses at the time of booking whether the costs you have incurred are distractible. He then immediately parks these costs to the correct cost account. In other words: even if you do your accounting yourself, it is wise to have your work checked by a "real" accountant or accountant. You prevent a lot of trouble with a possible book inspection by the tax authorities ...

Note: in this document we assume that you are going to book with e-Captain. In many cases, the program takes difficult pieces of work off your hands: calculating sales tax (VAT), dividing sales over debtors, and so on. It will all become clear to you later. It is not that we have the illusion that after reading these pages you are an accomplished accountant. We only try to guide you a little bit in the terminology.

If you really want to know the sissy of the stocking, a bookkeeping course is the right path. DISPI bv takes care of this for the e-Captain software. If you would like to know more about this, please contact DISPI bv, the creators of e-Captain, on 073-6141407. And of course your own accountant or one of whom we know that they already work with e-Captain.

Main rules of accounting

1. The bookkeeping is always balanced: "in balance".
2. Bookeeping means transferring one "possession" to another.
3. If the balance is disturbed during this transfer, a result is obtained.

On each of these cards your belongings and debts are listed . So you have a card with means of transport, one with inventory, one with your bank account, one for the bank, etc. These are the so-called "balance sheet accounts". In addition, you also have maps on which the costs (eg wage costs, depreciation costs, rent, energy and water, telephone costs, etc.) and revenues (for example, hardware turnover, software sales, other sales, etc.) are noted: the so-called "result accounts" ". - All the cards together form the general ledger - Every booking you make results in a minimum of two of these cards: you do nothing but transfer an amount from one card to another. What you post on the one positive (debit) you post on the other negative (credit).

Goal - Why do we do this?

At a given moment you have a box full of general ledger cards and you want to make up the state of affairs. The great thing now is that when you add up the balances of all the cards you have the first instrument: the balance balance. If you add all these balances together, you MUST come to zero. If not, you have booked something wrong somewhere and the bookkeeping is not in balance. We assume that you are indeed at 0. You then have, for example, the following balance:

Something crazy happens here: a negative result is profit and a positive result is loss! Take that for granted and look below how the balance will look like. (Balance = debts and assets)

Here we see why the profit is negative on the balance sheet: after all, the balance must be "in balance". We now have a total of 18,000 in assets. We started with zero, so the profit for this financial year was 18,000. This is where the ultimate goal of accounting has been achieved: we know exactly what our assets and liabilities are and what we have achieved in the past period in terms of profit or loss.

What did I earn?

Ultimately, there is an amount of profit (or loss, of course) at the bottom of the line. Many starting entrepreneurs then assume that that amount is the disposable income. You already feel it coming: that is not the case. That profit is no more than the commercial operating result. It is the basis for calculating the income. Depending on the legal or business form, it must be determined what happens to the result. In a sole proprietorship, the final amount is the basis for the preparation of the income tax return. In the case of a general partnership, the result must first be divided among the partners. With a private company (BV), the shareholders determine what will happen to the result. For example, a distribution can be made to the shareholders of any profit. In short: with only a Balance and Loss and Profit account you are not there yet. There you see again a good reason to finally transfer your work to an expert. Now let's first see if we can make it easier to make these bookings.

Booking – Journalize

If you want the financial management of the association, foundation or entrepreneur to be easier, you have to manage your accounts daily. You make daily bookings: you journalize daily. That is why we use the term journal for all bookings that have been made in a specific period: a chronological list of all bookings. Those bookings also mention journal entries. A journal item of the purchase of a computer with cash looks like this:

This means that you make a positive entry of 1000 in the accounts (debit), the turnover tax 190 in the positive amount (debit) and the cash account 1,190 negative (credit). This way you record all transactions within your company. It goes without saying that some ledger accounts are used more than others. So you will make many payments per cash, bank and giro. All purchases and sales on account are in principle settled on the accounts of debtors and creditors (the terms debtors and creditors are further discussed below in the diaries). It is therefore convenient to book in a way that the common account does not have to be entered again and again. That's why we work with diaries. Journals are actually notebooks in which we create journal entries. The diaries are divided into four categories: purchasing, sales, cash / bank / giro and memorial. The first three have a fixed "contra account", the memorial works just a bit differently. We will look at the diaries below.

Sales / Debtors

The sales journal is a sales diary and is used (you guessed it) to record sales. And in particular the sales on account: the sales for which you issue an invoice *. The person who receives the invoice from you (and who therefore has to pay) is from then on a debtor. Note: under "sales" we also mean charging costs and the like - so it does not only have to be turnover. Imagine: you sell a dishwasher on account for 1,000 euros excluding sales tax. In the sales book we record this entry as follows (we assume a computer accounting): * There are legal rules that state when and to whom you must issue an invoice. Take a look at the website of the tax office for more information or contact your bookkeeper / accountant.

The computer program knows a number of important things after entering:
• 1.190 euros must be entered on the accounts receivable
• the booking must reach the debtor 12345
• the VAT has to be calculated according to code 11 (high rate VAT to be paid)
• the remaining amount (turnover) must go to account 8000 (eg sell electro)


and then makes the following journal entry:

Note: The debtors account is generally subdivided into so-called sub-accounts: for each debtor, a card that contains the entries of that debtor alone. That is convenient, because then you can see exactly what you have to claim from which debtor. That is why you see here the column "debtor number". So here you see the big advantage of working with diaries: you enter one line which is split by the system into a complete journal entry. In other words, you enter a half-journal entry in which you post on the fixed contra account of the journal (in this case the accounts debtors). A journal of the sales type is therefore ALWAYS linked to a fixed contra account. You may notice that you are posting the turnover on invoices. These invoices are then generally placed in a separate diary by the accounting program. Some packages then make a sales book, others put the invoices in a journal of the type memorial.

Purchase / Creditors

The purchase book is a diary of the purchase type and is used (you guessed it) to record the purchases. And in particular the purchases on account: the purchases for which you receive an invoice. The person who issues the invoice to you (and who therefore has to pay you) is from then on a creditor. Please note: in this context, "purchasing" also means incoming invoices for costs, investments, etc. and not only for the purchase of your merchandise. Let's say you buy the dishwasher on account for 800 euros excluding sales tax. In the purchase book we record this booking as follows (we assume a computer accounting here):

The computer program knows a number of important things after entering:
• -952 euros must be entered into the account creditors
• the booking must reach creditor 6789
• the VAT has to be calculated according to code 12 (VAT to be claimed high rate)
• the remaining amount (the purchase value) must go to account 7000 (eg purchase electro)


and then makes the following journal entry:

Note: The account creditors are also generally subdivided into so-called sub-accounts: for each creditor a card on which the only creditor's bookings are. That is convenient, because then you can see exactly what you owe to which creditor. That is why you will see the column "creditor number" here. Of course you notice immediately: the sales and purchasing books work almost the same (only exactly the opposite). A diary of the type purchase is therefore always linked to a fixed contra account. We continue with the cash / bank / giro book.

Cash, bank and giro

A bank / bank / giro type journal is of course linked to a general ledger account of the cash, bank or giro type. If you have multiple greenhouses or bank accounts, you create a general ledger account for each cash or bank account and a linked diary. So you can have:
 
• Bank Book 1 - Rabobank
• Bank Book 2 - ABN / AMRO
• Bank Book 3 - ING
• Greenhouse 1 - greenhouse workshop
• Cash 2 - cash office
•And so on.

Booking in these diaries does not differ much from booking in the purchase or sales book. With those diaries, the contra account is the account of debtors or creditors, with the Bank Book 1 of our previous list is the general ledger account Rabobank. Suppose you have paid the previously purchased dishwasher by bank and the debit appears on your bank statement. You enter the following entry in the bank account:

Because you book here on a creditor, the system fills in the corresponding collection account creditors (in the example 1600). For book number, enter the number on which the purchase has been posted; the system can then neatly 'match' the purchase and payment. The computer program makes the following journal entry:

And that is exactly what we want: the debt to the creditor 6789 is reduced and the bank balance too. The debt is getting lower and it also possesses; exactly in balance! That is how it goes well. You first booked the purchase to the purchase account, at the same time made a debt to a creditor and later debited this debt against the payment. Bookkeeping is as simple as that. You also make payments of amounts for which you have not received an invoice. If you are going to refuel, for example, or buy a bunch of flowers. You can, of course, ask the pump holder for a bonnet, first of all a purchase of books and then the pin payment in the bank book against the purchase. But then it all becomes very precise. This means you can immediately book a refueling in the cash, bank or giro book directly into the cost account. So:

Because you directly post to the cost account, you do not enter a creditor number. The system then creates the following journal entry:

The amount of sales tax is determined by the system on the basis of the VAT code chosen by you (usually you can select it from a list). The amount that rolls out must be equal to the amount that is on your bonnet / invoice. So far the cash / bank / giro book (of which you can have as much as you have greenhouses, bank or giro accounts). A cash / bank / giro-type journal is therefore always linked to a fixed contra account. In the exercise of your association, foundation or business you usually also purchase items that last longer than the financial year in which you buy them. In other words, the costs of that purchase must be divided over the life of the purchased item. With a file cabinet for example you can go five years ahead. It is then the intention that you divide the costs over those five years *. We then call the purchased goods Fixed Assets. The cabinet costs 2,500 euros (excluding sales tax). You buy the cabinet on 1 July 2003 and deduct the costs in five years. The depreciation and book value then proceeds according to the following table:

Please note: it is also possible that you expect to sell the asset again after the depreciation period (for example with company cars). You then write about the purchase value minus the expected sales value. The journal entry for the first year will then look like this:

There are different forms of depreciation. We assume straight-line depreciation over the economic lifespan. Discuss with your accountant what the best solution is in which case. Please note: you can not change a system that has just been chosen in the meantime!

Tax return

In addition to producing overviews from which you can determine what the state of affairs is, the accounting is also used for the preparation of tax returns. The tax authorities have drawn up a number of rules with regard to the bookings of sales tax in particular (when do you have to charge them, at what time do you have to pay the tax, what may you deduct as input tax and what not, etc.). You will find the necessary information on the website of the tax authorities in the attached to the tax return. In case of doubt, contact your accountant.

Set up of an administration

Now that you start to get a bit of what diary for which is used and where your bookings ultimately end up, you are ready for the most difficult job: setting up a completely new administration. E-Captain comes with a standard administration that you can use for your own bookkeeping. It is, of course, almost never the case that this standard administration exactly matches what you need. You therefore have to cut and paste a lot. Another moment to let you be assisted by an expert.

The ledger

The basis of your bookkeeping is, as mentioned earlier, the general ledger: the collection of cards on which your bookings ultimately end up. The ledger is built "logically"; the accounts all get a number and the accounts that belong together are placed in each other's environment. A prescribed chart of accounts is not available (in our country). So in principle you may number as you wish. The diagram below is an example of how it will look like after the installation.

Diaries

If you have created the general ledger you can continue with the journals. As stated in the explanation of diaries, they are often linked to a fixed contra account; therefore you create the ledger first. Then you create a purchase book, a sales book, a cash book and a bank account. Finally, one memorial and you can get started.

Opening balance

An administration always starts with an opening balance; that's how easy it is. For example, suppose you are starting a business. You borrow EUR 3,000 from your father-in-law and buy a mobile phone, a used car and a few things. The opening balance looks like this:

You then create a diary of the type memorial (with the name OPEBAL - Opening balance) and enter the opening balance.

So ... your first bookings are over. If you now print a balance you will see that it indeed looks like above. Next, you go to the various diaries to buy and sell cash and bank transactions. You simply start with your bank statements and then finish all documents. After a while, it will all become clear to you.

At last..

So, you already know quite a bit about it. We can not emphasize enough that accounting is more than writing income and expenditure among each other. For example, it is important to judge with each booking whether there is a business expense at all. After all, it is not the case that expenses that you make with money "of the case" are automatically business expenses. When, for example, you buy a swimming trunks and you pay with the debit card of your business account, the tax authorities will not be inclined to assume that this is a business expense ... There you have another argument to leave your work by an expert. to check. An accountant is expected to know exactly what you can and can not do as business expenses. When checking your accounts, he will usually discuss with you what he has found and propose adjustments. You do not have to follow his advice, but it is sensible to do so ... Moreover, an accountant can deduce from the figures a number of matters that give him reason to give advice about the business form, the legal form, the possible divestment (or even expanding) ) of certain activities, and so on. So there are three forms of accounting
• You do everything yourself, from the booking fee and with the declaration without any form of control by a third party
• You do all (time-consuming) bookings yourself and then transfer the case to your accountant
• You periodically submit your administrative documents to your accountant and wait for what is to come.

Our preference goes to method 2: the book itself is with a bite your skill (and a good computer program such as e-Captain) good to do yourself and that saves you a lot of money. If you have doubts about a certain booking, simply call your adviser. Your accountant then acts as a safety net. For the costs of his declaration you can buy the certainty that you can come to the table with a smile during a book inspection by the tax authorities.