If you are making purchases on behalf of your clients as part of your service, (e.g. if you are an architect paying for clients’ application fees) you’ll need to group them into a category called disbursements.
These transactions are treated differently to expenses in terms of VAT and, if you are doing this a lot, can have a significant impact on your cashflow.
When we look at your books, we’ll be looking at your overall incomings and outgoings to determine your profitability, but we’ll also pay close attention to the timings of your payments and receipts.
Disbursements mean you are out of pocket for some time before you invoice your clients and it’s important to ensure your business holds enough cash to support this.
We will also ensure that you are reporting disbursements properly on your accounts, and claiming (or not) VAT correctly on these items.
This is an area of accounting that can be a bit of a minefield, and we can ensure you know exactly what your cash position is, who owes you what and when, and make sure you are all square with HMRC.
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