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• # 79413
• Wed 08 Feb 2012 09:46 AM

Hi all,
I have just taken over the bookkeeping of a small business, the owner is lovely but doesn't really understand the bookkeeping side of things.
The account were previously prepared by a VERY expensive accountant, and for the size of the business his charges were quite ridiculous.   
Anyway, he has emailed me a copy of the previous years Profit and Loss, but no balance sheet. When I asked for a copy of the balance sheet he simply replied that one hadn't been prepared for this job. My client has confirmed that she has never seen a balance sheet. (The business has been using this accountant for 2 years)

This strikes me as really odd - I would never give my clients P&L information without the B/S. 

(Drawings have been taken during the last 2 years, and I know that there are fixed assets. )

Any thoughts??

Ann    

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• # 79414
• Wed 08 Feb 2012 10:00 AM

Hi Ann,

I've taken work from a few accountants who never produced a blanace sheet for the businesses.  I also worked with one who didn't produce a P&L but instead settled for an Income and Expenditure Statement.

Although I would generally do a balance sheet and P&L there really are no requirements for them.  You'll probably find that the accountant was trying to save a few pounds.

Kris 

• Kris McCulloch
  www.ayrshireaccountancy.co.uk
  
  Winner - BKN Most Innovative Accountancy Firm 2012
  
  Latest Blog Post: Bookkeepers Award 2015

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• # 79415
• Wed 08 Feb 2012 10:13 AM

I guess the only thing to do now would be to work through the bank statements, inovices etc. and try to construct an opening balance sheet for the current year based on fixed assets bought or introduced, capital introduced and drawings.

It will be a bit of a slog but at least you should only ahve to do it once. 

• Pamela Dillon FMAAT MICB

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• # 79416
• Wed 08 Feb 2012 10:18 AM

It can sometimes be very difficult to prepare a balance sheet for a sole trader/partnership as they may use only one bank account that has both their personal and business transactions.

Also if there is a credit card they can get very mixed up.

As you mentioned that the client is not very understanding of the bookkeeping side of the business I feel that this may be the case. 

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• # 79417
• Wed 08 Feb 2012 10:28 AM

Hi Ann

If its a Sole Trader operation (which seems likely) even for Self Assessment tax purposes they won’t need to submit a balance sheet as their income tax will be based on:

I agree it seems a bit ‘one sided’ seeing only the P&L ie depreciation on an asset  but not seeing the balance sheet WDV of the same asset.

Best of luck with this New Client.

Brian

• Brian J Harford
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• # 79437
• Wed 08 Feb 2012 04:58 PM

Thank you all for your help, I really appreciate all of your thoughts on this. At least I won't be surprised next time it happens!

Kris, you're stop on - the P&L I mentioned is in fact an Income & Expenditure statement, and I'm sure he was trying to save money.


Adrian, your comments about the bank accounts make perfect sense, I can see why a balance sheet might be very complicated in these circumstances. 


At least this is a relatively small business, so I should be able to set things up my way quite quickly!

Ann     

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