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First Client in new practice - question about bank accounts

  • Member
  • Practice Licence Without Supervision
  • 4 posts
  • # 118546

Hello

 

I am a new member and have been approached by a client who owns a coffee shop. I have sent my letter of engagement but he has not completed it yet. I was concerned when I met him that he does not have a separate business bank account and does not require me to reconcile it. He also makes a loss and I dont know if he takes drawings or how.

 

I have asked him to confirm his arrangements for drawings. However

 

Q1. DO I need to concern myself with his drawimgs if all I am being asked for is to cash account for income and expenditure? (he does want this income v expense figure for the tax office)

Q2. Is it OK that I dont see or reconcile a bank account? 

 

Thanks in advance. I didnt think I would be this unsure with my first client?! Also I am in the Channel Islands (Not UK) so I dont have the pleasure of a branch/meetings...

 

Best wishes 

Ruth

  • Member PM.Dip
  • Practice Licence
  • 18 posts
  • # 118548

Hi Ruth

I am new in practice also and am working towards having a client who also has not previously had a separate business bank account.  After some very time-consuming investigatory work, I have found that she takes far more in drawings than she thought she did and her record of expenses leaves a lot to be desiered!  Thankfully she is very receptive to advice and is eager to sort out her records once this blasted covid-19 means she can run her business and we can meet up again!

For myself, I don't think I'd want to take on a client who only wants to involve me in one part of the business, because I would find that deeply unsatisfying.  Then again, when starting out any client is potentially an attractive client!!

If your letter of engagement clearly states what is in and outside the service you will provide, making it crystal clear that you are only dealing with the cash figures, then I can't see anything wrong with giving him what he is looking for.  What he then does with that and any other data is up to him.

Not sure if this is helpful or not but I do sympathise with your position and the newness of all these questions and decisions!

  • Fellow PM.Dip
  • 122 posts
  • # 118557

 

Hi Ruth,

 

as long as they are a sole-trader you do not need to worry about the amount of drawings as they are taxed on profits. So as long as you are happy you are receiving all information regarding business income and business expense and account on a cash basis you are OK.  That said you are able to provide a much better service to the client and can help them grow their business if they operate a seperate business account so I would encourage it.

As Pot B says, make sure your letter of engagement covers these points and the limits it places on the service you are able to provide.

 As for branch meetings can I suggest you consider setting one up?  There is no requirements regarding business experience.  happy to discuss it with you if you'd like more information

Lucy

  • Member
  • Practice Licence Without Supervision
  • 4 posts
  • # 118570

Lucy9999 said:

 

Hi Ruth,

 

as long as they are a sole-trader you do not need to worry about the amount of drawings as they are taxed on profits. So as long as you are happy you are receiving all information regarding business income and business expense and account on a cash basis you are OK.  That said you are able to provide a much better service to the client and can help them grow their business if they operate a seperate business account so I would encourage it.

As Pot B says, make sure your letter of engagement covers these points and the limits it places on the service you are able to provide.

 As for branch meetings can I suggest you consider setting one up?  There is no requirements regarding business experience.  happy to discuss it with you if you'd like more information

Lucy


 Hi Lucy

 

I really appreciate your advice thank you so much it is very useful and I feel reassured!

 

Best Wishes Ruth

  • Member
  • Practice Licence Without Supervision
  • 4 posts
  • # 118571

PotBeautiful said:

Hi Ruth

I am new in practice also and am working towards having a client who also has not previously had a separate business bank account.  After some very time-consuming investigatory work, I have found that she takes far more in drawings than she thought she did and her record of expenses leaves a lot to be desiered!  Thankfully she is very receptive to advice and is eager to sort out her records once this blasted covid-19 means she can run her business and we can meet up again!

For myself, I don't think I'd want to take on a client who only wants to involve me in one part of the business, because I would find that deeply unsatisfying.  Then again, when starting out any client is potentially an attractive client!!

If your letter of engagement clearly states what is in and outside the service you will provide, making it crystal clear that you are only dealing with the cash figures, then I can't see anything wrong with giving him what he is looking for.  What he then does with that and any other data is up to him.

Not sure if this is helpful or not but I do sympathise with your position and the newness of all these questions and decisions!


 Hi PotB

 

Thanks so much for taking the time to repsond. Yes it is far more daunting than I imagined! I was extremely careful with my letter of engagement so I am satisfied that it is clear. 

I think I was looking to make it more compliacated than it needs to be! Good luck to you as well and as you say, starting out I am pleased to have some client interest.

Best wishes

Ruth

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