Accounting basics

Sage Help Centre

To get the most from your software, it's important to understand the basics of accounting and how this works in Sage Accounts.

There are also a range of tasks you may want to carry out to ensure the values appear on the correct reports, for example, when recording salaries.

Training

If you want to learn more, we've a Bookkeeping E-learning course available for you to follow in your own time.

We also have self study workbooks, E-learning and certification courses for both Sage Accounts and Payroll.

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Your business is unique

All businesses are different. Before you set up Sage Accounts, you should think about how your business is structured as this may affect how you enter your data.

When you first open the software, you've a generic template, which you can build on to make it fit with your business.

A little preparation now will help you get the most from your software.

 

Sage Accounts uses double-entry bookkeeping to record your transactions.

When you post entries, different transaction types record your values on what's known as the nominal ledger accounts.

The nominal ledger accounts are grouped into different types such as income, expenditure, assets, liabilities and capital. You can see your balances for each type when you run your management reports. This helps you to see how your business is performing at any moment in time.

The following articles help you create, copy, edit and correct your chart of accounts to suit your business.

Article name Article number
How to create, copy or edit a Chart of Accounts layout 27557
How to amend and correct a chart of accounts 31565
To identify and correct errors in your Chart of Accounts layout 11261
Partial Chart of Accounts 13853

When using Sage Accounts there are a number of common tasks that you may need to carry out.

Bad debt

Bad debts are invoices that your customers haven't paid. Hopefully you don't have to deal with these often, but if you do, for help visit the Credit control and managing your cash flow area.

The following articles may also be useful:

Article name Article number
How to manually write off customer invoices to bad debt 11317
How to set up and manage a provision for bad debt 11545

Loans and depreciation

Most businesses deal with loans and depreciation at some point, whether it's a mortgage for a new property or depreciation on a vehicle.

In Sage Accounts it's easy to record loans and depreciation.

Article name Article number
Hire Purchase of an asset (HP) 14087
How to set up and post inter-company nominal transfers 11214
To record the purchase of a property using a mortgage in Sage Accounts 25345
The Fixed Assets Register 17384
Depreciation 14341
Sole trader - How to record the money used to start your business 8010
How to record a company loan 11572
How to record a director's loan 14648

Prepayments and accruals

Prepayments and accruals are adjustments you make to your expenses to spread them evenly across the periods they relate to.

For example, if you pay your annual rent in January, your profit and loss report for that month shows the rent for the whole year. If you post a prepayment adjustments, the rent will show evenly in each month across the year.

Article name Article number
How to record manual prepayments and accruals 11285
How to process a one month prepayment over the year end 6235

Tax

Tax can be complicated but in Sage Accounts, you can easily post transactions to show the values correctly. For more information about VAT, visit the VAT in Sage Accounts - UK or VAT in Sage Accounts - Ireland area.

Article name Article number
To post a manual VAT transfer 14091
Corporation tax 27578
How to record the Climate Change Levy - UK only 11929
How to record the Aggregates levy - UK only 11930

Wages

If you pay employees, you can effortlessly record your wages using salary journals. If you're also using Sage Payroll you can automatically post your salary journals.

Sage Accounts also helps you to record drawings, income tax, national insurance and other wage related transactions.

Article name Article number
How to record a salary journal - UK only 11252
To record Income Tax and National Insurance as a sole trader 8014
How to record drawings 14028
How a director draws money from a limited company 23728
How to record partnership transactions 11242
How to account for childcare vouchers 23791
Cycle to work scheme 25373

Other tasks

Here are a number of other common tasks to help you when preparing your accounts.

Article name Article number
How to record capital introduced 14106
How to record work in progress 11570
How to set up and record a retention 13864
How to spread the effect of a sale over several months (Deferred income) 23806