I run a small limited company in the UK which requires very simple bookkeeping.
The company sales online services (internet apps) and the only costs the company have are:
- domain and hosting,
- transaction fees,
- director’s salary paid monthly.
I work from home and I made myself all the apps the company sales. I keep a simple cash book and record every transaction.
However, the company operates all over the Europe and accepts payments in Euros and Zlotys.
In this example, let’s say all payments were taken in Zlotys (PLN).
As you can see from the table, the company had two customers and earned 100 PLN in total.
According to the law, all the received amounts must be converted into pounds (GBP). I made a few simple changes to the cash book:
From this table you know that on my bank account there should be two transactions of 50 PLN each.
And now let’s say that 2012-02-12 is the last day of my accounting year.
I have 100 PLN at my disposal (on the bank account), which should equal to 19.59 GBP. However, over the year the pound fluctuated and 100PLN is today worth 19.80 GBP.
This way the company earned 21 pence.
I have another cash book in which I record other incomes (for example bank interests).
And now the basic question – do I do it right?
Is this form acceptable?
How often should I record profits and losses if the currency fluctuates?
Should I do it every time the exchange rate changes or on the last day of my accounting year? (I would opt for the first one.)
Should I have one book for both sales in pounds and zlotys or keep the sales in separate books?
To anticipate your suggestions - yes, I'm going to contant an accountant, but first I would like to get the basics and make sure I understand what I'm doing.
In the meantime, I created another table.
This table shows transactions in both pounds and zlotys. There is also a total amount received in GBP and ammout of assets in PLN. Do you think this is clear to understand? I'm not sure whether this could look like if I had 29GBP and 100PLN on top of that. If so, how can I improve the table?