Tax categories feedback

As an accountant/ bookkeeper, are there any categories that we’re missing or that you see commonly use with your clients?

I’ve been thinking about category sets based on trade ie: landlord, tradesman, online seller etc.

Let me know your thoughts…

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I think categories are fine for the end user and tailoring to trades would be fun and helpful for them - but for the accountant all these categories need to feed into (or enable us to feed into?) a standard nominal ledger chart of accounts. I’ve pasted one below we nicked from Xero and use in most cases, it covers everything we might need to gather, particularly the assets and liabilities (the codes are just arbitrary, we map the TB file going into TaxCalc manually the first time so it remembers form then on - it does need codes though I think). The Coconut income and expenses categories are just fine as they are really, it’s transactions that effect the balance sheet that are a bit lacking so far. It’s not that we want an end user to use these nominal accounts, rather that any one of these might be relevant so there should be a category that we can map to these codes.

So for instance a purchase of an asset (for any accrual client - that is any client who needs accounts and all limited companies of course) needs to be obvious from the categories so we can feed it into say ‘Plant and Machinery - Additions’. At the moment there is a category for Vehicles and one for Equipment and these would work fine, both for cash basis and accrual accounting.

As an aside, back in the 80’s several software producers tried to make ‘expert’ bookkeeping software, software that had a entry for every conceivable kind of transaction a user might make. For instance ‘buying an asset on hire purchase’ as you can imagine was a major job, creating journals for interest accrued, capital elements and all - but in the end there are always transactions you can’t allow for! So that’s why the nominal ledger codes work - put it into one of these pots and we know what it is! :blush:

*the amounts were just me exporting from Coconut and attempting to map to the proper codes - mostly worked ok.

*Code *Name
200 Sales -45005
260 Other Revenue -35
270 Interest Income -120
300 Opening Stock
310 Cost of Goods Sold 198
315 Closing Stock
320 Direct Wages 105
325 Direct Expenses
331 Equipment Hire 80
400 Advertising & Marketing 93
401 Audit & Accountancy fees 10
404 Bank Fees 20
408 Cleaning
412 Consulting 50
416 Depreciation Expense
418 Charitable and Political Donations 34
420 Entertainment-100% business 115
424 Entertainment - 0%
425 Postage, Freight & Courier 100
428 Bad Debts
429 General Expenses 208
433 Insurance 92
437 Interest Paid 30
441 Legal and Professional Fees
445 Light, Power, Heating
449 Motor Vehicle Expenses
457 Operating Lease Payments
461 Printing & Stationery 103
463 IT Software and Consumables 101
465 Rates
469 Rent 225
468 Use of Home as Office
473 Repairs & Maintenance
477 Salaries 199
478 Directors’ Remuneration 60
479 Employers National Insurance
480 Staff Training 107
482 Pensions Costs 98
483 Medical Insurance
485 Subscriptions 106
489 Telephone & Internet 211
493 Travel & Subsistence 425
499 Profit/Loss Sale of Fixed Assets
500 Corporation Tax
603 Cash on Premises
605 Current Bank Account 3336
607 Savings account 845
610 Accounts Receivable (Trade Debtors)
611 Less Provision for Doubtful Debts
613 Other Debtors
620 Prepayments
630 Stock & WIP
710 Office Equipment
711 Office Equipment - Accumulated Depreciation
712 Office Equipment - Current Year Depreciation
713 Office Equipment - Additions 70
714 Office Equipment - Disposals
760 Motor Vehicles
761 Motor Vehicles - Accumulated Depreciation
762 Motor Vehicles - Current Year Depreciation
763 Motor Vehicles - Additions 15000
764 Motor Vehicles - Disposals
770 Plant & Machinery
771 Plant and Machinery - Accumulated Depreciation
772 Plant and Machinery - Current Year Depreciation
773 Plant and Machinery - Additions
774 Plant & Machinery - Disposals
780 Intangibles
781 Less Accumulated Amortisation on Intangibles
785 Buildings
786 Less Amortisation on Buildings
790 Leasehold Improvements
791 Less Accumulated Depreciation on Leasehold Improvements
800 Accounts Payable
801 Unpaid Expense Claims
805 Accruals
806 Other Creditors
811 Credit Cards 756
812 Loan - < 1 Yr 354
814 Wages Payable - Payroll
820 VAT 5342
825 PAYE Payable
826 NIC Payable
830 Provision for Corporation Tax 5006
835 Directors’ Loan Account 9572
840 Historical Adjustment
850 Suspense 109
858 Pensions Payable
860 Rounding
900 Bank Loans
910 Hire Purchase Loans
920 Deferred Tax
950 Capital - x,xxx Ordinary Shares
960 Retained Earnings
970 Funds Introduced
980 Drawings/Dividends Taken 2000
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Thanks for this Tim, Really appreciate this insightful feedback!

James

Wow @AegisAccounting , that is a lot of categories :smile: I can see how the different categories would be beneficial to different businesses.

If there was a big list of categories in Coconut, It would be really good if you could hide/show categories that were not relevant to your business, that way you wouldn’t have to sift through a whole big list every time you needed a certain category when only 5 or 6 are ever relevant to you.

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It certainly is, all eventualities should be in there (I bet there are some that escape even this list! :blush:).

But the end user doesn’t need all these, I think the point is you should still only be presented with a very simple set of categories just as now, its the accountant who needs the rest to make up a full set of accounts and ensure everything is properly allocated whilst working in the accountants portal and exporting to the accounts production and tax calculation software. We do need a few extra categories, say for items in that balance sheet your accountant needs to know about, categories that would flag up situations far more complicated than Coconut needs to deal with.

So say for example you arranged a business loan and that money went into your Coconut account. There is nowhere for that in the categories so it could easily get allocated to say Investment or Personal - or even Other Income which would mean it would be classed as taxable. Also when you pay that loan repayment part of that amount will include interest (which is tax deductible whereas the capital element is not, that just goes to pay off your liability), there’s no way to record that because you can’t split a transaction yet.

But that doesn’t matter, because so long as there is a category that suits we will notice, if it’s in the right place our eagle eyed bookkeeper would spot it during the weekly checkup! So it would be up to us to notice that loan receipt into say Loan Investment (?), notice your payments to Loan Repayments, put the two together and arrive at a loan balance (for the balance sheet) and calculate the interest so we can claim it back for you.

:Advert: Which to be honest is another reason a bookkeeper or accountant’s once over is going to be even more important when Making Tax Digital means HMRC grabs your tax liability directly from your transactions every quarter… although we can always grab back what they shouldn’t have taken at year end! :Advert Ends: :blush:

When it to comes to Assets again for instance, Coconut do have at present the ‘Vehicles’ category and the ‘Equipment’ category, so again if we saw an entry in either of those we would know immediately that you had bought an asset (assets are treated differently in the accounts to usual expenditure if you are not using Cash Basis). So if Coconut had a nice neat chart of accounts like the one listed in our Accountants Portal, then that could automatically map the end users ‘Equipment’ category to our ‘Office Equipment - Additions’ category and Bob’s your uncle - nothing could escape through the cracks of category blindness!

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