I have recently started bookkeeping for a small sole trader who is not VAT registered (under threshold).
He was using Excel spreadsheets for income and expenditure and the last accounts were made from these by his accountant for part year 2015-16. Since then he has not kept up to date books and so I’m helping starting from April 2016 for 16-17 FY. However one of his suppliers has issued a credit note that must relate to an invoice in the previous year. I’m used to using other systems where you can just raise a credit note onto a supplier account and not have to ‘see’ an invoice already on the supplier ledger to allocate against, as seems to be the case with Quickfile.
At this point I’m not sure whether or not he had paid the original invoice by the time the credit note was issued.
That’s correct 15-16 was his 1st trading year and were in Excel only. I have not seen this data yet. So I’m setting up a computerised system for him (Quickfile was the choice) and starting the data for FY 16-17. The credit note is from April 16 and with no corresponding invoice in April, it must relate to FY 15-16, but at present don’t know it it was paid when the supplier raised the credit.
I’d like to add that I’ve spoken with the accountant that did his 15-16 accounts and he didn’t do a balance sheet, just a very simple P&L. I’ve not even got a trial balance to go off.
Without looking at the Excel for that year, I’m sort of in the dark. The only thing the business owner & myself got was the cost of a few assets that would be the opening balances in Quickfile.
In such situations you can enter the original invoice on the last day of the 15/16 FY, then credit note it in the 16/17 FY.
When bookkeeping for a sole trader it’s more important to ensure the P&L values are correct as this is what is used to produce a tax calculation. Trying to get an accurate TB and Balance Sheet is not really a huge concern for most sole traders.
When you run the 16/17 P&L report it will just pickup the Credit Note without the original invoice.