YE Accounts System Step-by-Step Contents

Transcription

1 Contents 1. Introduction The Young Enterprise Accounts System at a Glance Regular Management Accounts General Principles More About YE VAT (Value Added Tax) Receipts: money coming into your company Payments: money going out of your company Paying Surplus Cash into the Bank (Transfer) Drawing Cash out from the Bank (Transfer) Checking Accuracy - Reconciling the Balance Checking Accuracy Cash Reconciliation Debtors: money owed to you (optional) Creditors: money you owe others (optional) Monthly or Interim Reports Stockcounting Calculating the closing stock Generating Monthly or Interim Reports Interim Accounts for your Company Report Summary Extended Trial Balance Profit and Loss Account Balance Sheet End of Year Reports Allocating Profit Filling in the End of Year Accounts Input Form A note about Bonuses and Donations Statement of Taxation Liabilities Young Enterprise 2014

2 1. Introduction Congratulations on your appointment as your company s Finance Director. Although everyone in your company will have an important role to play, your job is vital, as you will be able to provide the information and guidance that the Board of Directors will need to enable them to make important decisions. At first glance the online company accounts system may look rather complicated but please don t panic, there is plenty of help on hand. Firstly this guide has been written to try and make things as easy as possible. You should take time to read it through with your adviser. Secondly you should not have to face this task alone. Ask the Board to appoint a Deputy Finance Director. This person should work with you and be able to take over if for some reason you are not able to attend a meeting. Thirdly, and probably most important, your Advisers will be there to help and guide you. Most businesses these days make full use of technology for accounting purposes and we have developed the online company accounts system to reflect this. The online accounts system will automatically do a lot of the calculating for you but it is very important that you understand what these figures mean, because it is your job to report on the company s finances and explain them to your fellow Directors. 2. The Young Enterprise Accounts System at a Glance The following options can be accessed through the Company Accounts section of YE Online. IMPORTANT: It is recommended that only one company member uses the accounts system to ensure that data is not lost or incorrectly edited. Ledgers Monthly or Interim Reports End of Year Reports Receipts table Payments table Debtors table (optional) Creditors table (optional) Summary Extended Trial Balance Report Profit and Loss Account Report Balance Sheet Report Statement of Taxation Liabilities Report Liquidation Report Full set of reports 2 Young Enterprise 2014

3 3. Regular Management Accounts 3.1 General Principles Record all money transactions Each and every transaction must be recorded somewhere in the Receipts and Payments tables. Record all credit transactions If you choose to buy or sell on credit... i.e. you dispatch or receive goods now and settle the payment at a later date or you sell goods/services now and receive the payment at a later date...you must record these entries in the Creditors (money we owe others) and Debtors (money owed to us) forms. When you have paid off a Creditor or a Debtor has paid you this should be recorded on these forms and the entry will be added to the payments or receipts table automatically. However, it is expected that the majority of your transactions will be for cash, and that you will only buy or sell on credit rarely. If you carry out all of your transactions for cash and do not buy or sell on credit then you do not need to worry about using the Creditors and Debtors forms at all. Reporting of transactions One of your difficulties as Finance Director will be to ensure that all members of the company report to you all transactions they make. It is all too easy to find, for example, that someone sells some of your products on credit and forgets to report this to you. Then if the person to whom the goods have been sold does not pay, you have no record of the transaction and the money due is lost. Self checking systems Any good accounting system incorporates a number of controls so that each step can be self-checking. It is most important for you to carry out these checks as described so that you can be confident that your work up to that point is accurate. No accountant ignores these controls because, otherwise, the reports that are generated will be incorrect. Banking your cash Each week when you receive cash, pay it into the bank straight away. This is good business practice. It also makes book-keeping easier. Keeping records You must file and retain all receipts and invoices carefully. They are an important part of the company s financial records. Always keep all documents which provide evidence of money received or paid out. YE VAT (Value Added Tax) It is one of the rules of Young Enterprise that you calculate YE VAT on all your sales and purchases so that, like a company, you learn about VAT. The difference is that you pay it to Young Enterprise rather than to HMRC (Her Majesty s Revenue and Customs). It should be noted that the rules of Young Enterprise VAT differ from the VAT rules that apply to real companies who have to pay it to HM Revenue and Customs. More details on Young Enterprise VAT can be found in section 3.2. Why do things appear twice? You will see that the amount of money received appears on the forms twice. Once on the left hand side of the form and again on the right hand side. This will be true for all amounts you enter in your accounting forms whether they be Payments, Receipts, Creditors or Debtors. You will have noticed that columns are headed DR (debit) or CR (credit). Any item that you enter in a debit column must have an equal or corresponding entry in a credit column. Similarly every credit item must always have an equal or corresponding debit. This is known as double entry book keeping. Don t forget that any cash that you are holding must be kept in a safe place. Try to borrow a cash box or even buy one if funds will allow. We recommend that when it is not being used the box is locked away in a secure place. Before you leave a meeting always ensure that you have personally handed the box over to whoever is going to be responsible and ensure that that person is going to be available at your next meeting or when you will need cash. However, all cash which is not currently needed should be banked as soon as possible. This is good business practice. KEEP YOUR CASH SECURE 3 Young Enterprise 2014

4 3.2 More About YE VAT (Value Added Tax) Background It is important that you understand the implications of YE VAT. It is one of the rules of Young Enterprise that you calculate YE VAT on all your sales and purchases so that, like a company, you pay VAT. The difference is that you pay it to Young Enterprise rather than to HMRC. These payments, plus your registration fee and YE Corporation Tax serve two purposes: firstly to make your company affairs as realistic as possible and secondly to provide some of the income Young Enterprise needs in order to provide you and your successors with this experience. In the unlikely event of purchases exceeding sales, Young Enterprise will not make any refunds of YE VAT. On no account must any Young Enterprise company attempt to register with HMRC for VAT, nor show any VAT on invoices sent to customers. VAT on Sales YE VAT is calculated on all sales (even though there are some exemptions in real world VAT). The selling price to your customers must include YE VAT at the current rate - 20%. Therefore once you have carried out your market research and determined the selling price you must divide this figure by 1.2 to obtain the true sales price you will receive. e.g. Your product selling price = 2.40 Sales price that you will receive = 2.00 ( 2.40 divided by 1.2) YE VAT received on this sale = 0.40 ( 2.00 x 0.2) Each time you make an entry for sales in one of your forms (Receipts or Debtors) you need to divide it by 1.2 to obtain the amount to be entered in the sales column. You can then calculate the YE VAT by multiplying this figure by 0.2. Having entered that in the YE VAT column, check that this, plus the amount entered under sales equals the total amount. NB: Prizes are not subject to YE VAT as shown at the foot of the Receipts table. VAT on Purchases YE VAT is calculated on all purchases (even though there are some exemptions in real world VAT). The amount of VAT paid on some purchases may be shown on the invoice. If not, you need to calculate the split in cost of your purchases in the same way as for sales for all those items shown on the Payments and Creditors forms. e.g. Amount spent on purchase = Sales price on this purchase = 30 ( divided by 1.2) YE VAT on this purchase = 6.00 ( 30 x 0.2) Interim YE VAT and Corporation Tax The online accounts system is designed to calculate YE VAT and Corporation Tax as paid at the end of the company year only. If you are asked to make an interim payment of YE VAT or Corporation Tax this must be done outside of the online accounts system. If you make an interim payment: Do not enter the interim payment on the payments table When reconciling with the bank balance take the interim payment into account When distributing your profits remember that you have paid some of the tax already 4 Young Enterprise 2014

5 3.3 Receipts: money coming into your company This Form Is Used To Record all payments made to your company For Each Transaction You Should Enter the Date of the transaction Complete the Where From column. This indicates where the money has come from. Enter the total amount paid in either the Cash or the Bank column. o Use the Cash column if you have received cash o Use the Bank column if you have received a cheque or electronic payment Analyse the payment in columns 3 to 8. The totals of columns 1 and 2 must always equal the totals of columns 3 to 8. Pay particular attention to YE VAT requirements. Refer to the examples if necessary. Example Receipts Transactions 15th September You sell 150 shares for a total of 150 cash (cash column) There is no YE VAT on shares 5th October You sell 6 clocks in cash for 36. This sale splits into 6.00 YE VAT and sales 13th October You sell a clock for 6. The clock is paid for by cheque (bank column) This sale splits into 1.00 YE VAT and 5.00 sales See below for how these transactions should be entered into the receipts table shares sold clocks sold clock sold Titles with a * indicate that YE VAT should be accounted for on these items. See section 3.2 for more about calculating YE VAT. 5 Young Enterprise 2014

6 3.4 Payments: money going out of your company This Form Is Used To Record all payments made from your company For Each Transaction You Should Enter the Date for each transaction. Complete the Where To column. This indicates where the money is being paid to. Enter the total amount paid out in either the Cash or the Bank column. o Use the Bank column if you pay by cheque or electronic payment o Use the Cash column if you pay by cash. Analyse the payment in columns 11 to 20. The totals of columns 9 and 10 must always equal the totals of columns 11 to 20. Pay particular attention to YE VAT requirements. Refer to the examples if necessary. Example Payments Transactions 12th September You pay your registration fee of 80 to Young Enterprise by cheque There is no YE VAT on the registration fee 15th September You pay 35 for materials by cheque This splits into 5.83 YE VAT and Purchases 20th September You pay 6.23 for some stationery This splits into 1.04 YE VAT and 5.19 Stationery See below for how these transactions should be entered into the payments table: Young Enterprise Purchases Purchases Titles with a * indicate that YE VAT should be accounted for on these items. See section 3.2 for more about calculating YE VAT. 6 Young Enterprise 2014

7 3.5 Paying Surplus Cash into the Bank (Transfer) This stage involves both the Receipts and Payments Tables. Paying surplus cash into the bank involves both handing money out (a payment), because you are reducing the amount of cash you hold, and receiving money into the Bank Account (a receipt). Consequently this transaction needs to be recorded on both tables, Payments and Receipts Payments Table - you have withdrawn your cash to pay into your Bank Account Enter the Date for each transaction. Enter Bank in the Where To column. Enter the amount in column 10 - Cash. Enter the amount in column 20 - Bank and Cash Transfers. Receipts Table - your Bank Account has received the money Enter the Date for each transaction. Enter Cash in the Where From column. Enter the amount in column 1 - Bank. Enter the amount in column 8 Bank and Cash Transfers. Example You pay 140 cash into the bank on 15th October 1. Payments Table: you have taken 140 cash out of the cash box to the bank account Bank Receipts Table: You have paid 140 cash into the bank account from the cash box Cash Young Enterprise 2014

8 3.6 Drawing Cash out from the Bank (Transfer) Should you ever need to draw cash out of the bank (for example you may need to draw out some change for a Trade Fair) the entries are similar but opposite to paying money into the bank. Taking money out from the bank account involves both handing money out (a payment), because you are reducing the amount of cash in the bank, and receiving money into the cash box (a receipt). Consequently this transaction needs to be recorded on both tables, Payments and Receipts Payments Table - you have withdrawn money from your Bank Account to pay into the cash box Enter the Date for each transaction. Enter Cash in the Where To column. Enter the amount in column 9 - Bank. Enter the amount in column 20 - Bank and Cash Transfers Receipts Table - your cash box has received money Enter the Date for each transaction. Enter Bank in the Where From column. Enter the amount in column 2 - Cash. Enter the amount in column 8 Bank and Cash Transfers Example You withdraw 90 from your bank account on 15th October 1. Payments Table: You have taken 90 from the bank account into the cash box Cash Receipts Table: You have paid 90 into the cash box from the Bank Account Bank Young Enterprise 2014

9 3.7 Checking Accuracy - Reconciling the Balance One regular job you will need to undertake is to reconcile the balance shown on your bank statement with the balance recorded in your books. In other words you must ensure that the money that your accounts tell you that you have in the bank agrees with the balance on your bank statement. You should arrange for the bank to send you a monthly statement and you should carry out this task every time a statement arrives. Calculate the bank balance from your books by subtracting the Bank column 9 (on the payments table) from Bank column 1 (on the receipts table): Bank Balance = total of column 1 total of column 9 (receipts) (payments) If you have money in your account then the total of column 1 will be larger. If you are overdrawn, i.e. more money has been drawn out than you have put in, then the total of column 9 will be larger. This figure should agree with the figure on your bank statement. If it doesn t match then take the following steps. a) Check for Mistakes Take a look at the bank statement and see if you can identify any entries which do not appear in your payments or receipts table or if you have entered any entries incorrectly. b) Uncleared Cheques The most common reason why your balance might be different from that shown on the statement is that when you draw (issue) a cheque you enter it in your bank payments table immediately, but it takes some time to go through the banking system. These are called uncleared cheques. Therefore, the bank statement shows a higher balance until these entries reach your bank account. c) Unrecorded Receipts Sometimes you may have recorded a receipt which is not yet on the bank statement. This would be an unrecorded receipt. d) Other If your bank account is in credit you may have earned interest from the bank which you need to enter on your receipts table. If you are overdrawn the statement may show interest and/or bank charges which you need to enter on your payments table. Use the below example form to agree the bank statements (Bank Reconciliation) A B Total Bank receipts Total Bank payments C D Bank Balance from accounts Bank Balance from bank statements E Difference (C-D) Represented by Uncleared Unrecorded receipts Other (bank charges interest etc.) 9 Young Enterprise 2014

10 3.8 Checking Accuracy Cash Reconciliation You should also check the cash totals to the amounts actually held, which will need to be counted, as shown below: Agreeing the cash balance (Cash Reconciliation) A B C D E Cash receipts Cash payments Cash balance from accounts (A-B) Cash counted in cash box Difference to be investigated (C-D) 10 Young Enterprise 2014

11 3.9 Debtors: money owed to you (optional) Debtors are people or organisations which owe you money. Most Debtors are people who have been provided with some of your product or service but have not yet paid. Obviously you need to keep a record of these so that you can show it properly in your accounts and ensure that you get paid. You do not have to use the Debtors table if you collect payment at the time of sale for all goods and services. This form is used to record details of all Debtors (people or organisations which owe the YE company money). You Should Record the Debtor s name. Enter the date of the transaction. Enter the total amount of the debt in column A. Analyse the payment in columns B to D. The totals of column A must always equal the totals of columns B to D. Pay particular attention to YE VAT requirements. Refer to the example if necessary. The Debtors form is used only if you make any sales on credit. Naturally you will try to avoid that, if at all possible, as it affects your cash flow. The Sales Director and other students will inform you of these transactions and you should enter the amounts as soon as you know the goods have been sent to the customer. Recording a Debtor as paid Once a Debtor has paid your company you must record this on the Debtors form. You should: Record the date the payment was received in column E Indicate whether it was received as CASH or CHEQUE in Column F Select PAID in column G Once you have marked a Debtor as PAID on the Debtors table and saved changes it will be automatically added to your receipts table. Example Debtor Transaction a) You have sold some of your products to a company called Presents Galore. You have sent them an invoice for 12 telling them that they have until the end of the month to pay for them. 12 selling price of your product splits up into 2.00 YE VAT and Sales. The table below shows how you should record this debt. Presents Galore UNPAID b) Later that month Presents Galore send you payment for the invoice by cheque. The table below shows how you should record this. Presents Galore Cheque UNPAID Once you have saved changes this line will automatically be added to your Receipts table. 11 Young Enterprise 2014

12 3.10 Creditors: money you owe others (optional) Creditors are people or organisations that you owe money to. Most Creditors will be suppliers who you have obtained goods or services from on credit. Again it is important that a proper record is kept. You do not have to use the Creditors table if you pay immediately for all goods and services that you purchase. This form is used to record details of all Creditors (people or organisations owed money by the YE company). You Should Record the Creditor s name. Enter the date of the transaction. Enter the total amount due to be paid out in column H. Analyse the payment in columns I to P. Totals of column H must always equal the totals of columns I to P. Pay particular attention to YE VAT requirements. Refer to the example if necessary. You may occasionally wish to arrange credit terms with your suppliers. The Operations Director and other students will inform you of these transactions and you should enter the details of the goods received for which payment has not yet been made. Recording A Creditor As Paid Once your company has paid a Creditor you must record this on the Creditors form. You should: Record the date which you made the payment in column Q Indicate whether you paid it by CASH or CHEQUE in Column R Select PAID in column S Once you have marked a Creditor as PAID on the Creditors table and saved changes it will be automatically added to your payments table. Example Creditor Transaction a) You have bought some stationery from a company called Alpha Print. They have sent you an invoice for 10 giving you until the end of the month to pay. 10 selling price of your sale splits up into 1.49 YE VAT and 8.51 Stationery. The table below shows how you should record this debt. Alpha Print UNPAID b) Later that month you pay the invoice from Alpha Print by cheque. The table below shows how you should record this Cheque Alpha Print PAID Once you have saved changes this line will automatically be added to your Receipts table. 12 Young Enterprise 2014

13 4. Monthly or Interim Reports You should generate a new set of these reports at the end of every month. This process will allow you to check the accuracy of your book-keeping. The monthly reports also enable you to tell how much profit or loss you have made (Profit and Loss Account) and prepare a statement called a Balance Sheet which shows what the company owns (Assets) and what it owes (Liabilities). Armed with this information you will be able to give a meaningful report at a Board Meeting and answer any questions which are raised. You should be careful not to confuse profit with cash. You may have over 300 in your bank account but if that includes 250 of shares that you will have to repay, your profit may not be as large as you first think. For this reason it is important to prepare monthly reports to identify the true profit of your company so that management decisions can be taken in the knowledge of the facts. The Monthly or Interim Reports contain the following: Summary Extended Trial Balance (see section 4.4) Profit and Loss Account (see section 4.5) Balance Sheet (see section 4.6) 4.1 Stockcounting Calculating the closing stock Closing stock is the value of any goods that your company is currently in possession of (materials, work in progress and finished goods). It is good business practice to count stock regularly, which for Young Enterprise purposes should be monthly at the time that the monthly reports are completed. This should be the responsibility of the Operations Director. To keep matters simple, it is suggested that unused materials and materials in work in progress are valued at purchase price, and finished goods for sale are valued at their total variable cost as calculated on the Single Product Break Even Forecast Sheet. (see section 6.2). The Operations Director should carry out a fresh stock count at the end of every month as the closing stock value is likely to be different each time. Documentation of the count results can be simple but it should be formal and capable of standing up to scrutiny. Once the closing stock value has been calculated you are ready to generate the monthly or interim reports. 4.2 Generating Monthly or Interim Reports In the accounts section of YE Online you will find an option for Monthly or Interim Reports. In this section you can enter the closing stock value which will generate a new set of reports as pdfs. You can generate these reports as many times as you like and as often as you like. It is a good idea to keep printed and saved copies of these reports for your records. There is more detail about exactly what each of these reports show in sections 4.4, 4.5 and Interim Accounts for your Company Report Your final report (as submitted for the competition and presented at your AGM) should contain the most recent profit and loss account and your most recent balance sheet. This applies whether you are submitting your company report before or after liquidation. 13 Young Enterprise 2014

14 4.4 Summary Extended Trial Balance The main purpose of this report is to check that all your bookkeeping entries are correct. It is split into 4 sections which pull information from the Payments, Receipts, Creditors and Debtors tables. For each section, the only thing you need to check is that the totals at the bottom are the same as each other. What to do if the totals don t match up If the totals on the report don t match up you have made a mistake somewhere on your Payments and Receipts tables. Go back and check the following: Make sure that for each bank transfer you have a corresponding entry in both payments and receipts If you spot a mistake, you can go back to your Payments and Receipts forms to change any incorrect entries and then generate the monthly reports again. 14 Young Enterprise 2014

15 4.5 Profit and Loss Account This report shows how much profit or loss you have made and where that profit has come from. The figures in this sheet are pulled from the Extended Trial balance so it is important to make sure the Extended Trial Balance is correct before you look at the profit and loss account. The table below shows what each line in the profit and loss account represents. This example profit and loss sheet shows that the company has made a net loss of 9.90 (displayed as ). A net profit would be indicated by a positive number. 15 Young Enterprise 2014

16 4.6 Balance Sheet This report shows the total ASSETS (what the company owns) and the total LIABILITIES (what the company owes). The table below shows what each line in the Balance Sheet represents. The value of the shareholders funds in this balance sheet ( ) is less than the amount that they originally invested ( 150). This is because the company has made a loss of It is important to understand that even though this company has cash in the bank and in their cash box they have still made a loss because they have a responsibility to pay back the shareholders investment if they can. A Note about YE Tax and Profits At the end of the year the total YE VAT and Corporation Tax is calculated and companies must pay this to Young Enterprise. It is possible (but unlikely) that companies may be in a position at the end of the year where they would be owed tax back to them. Unfortunately Young Enterprise is unable to pay any tax refunds back to companies at the end of the year. This means in the situation where YE VAT is owed to the company overall, that the profits calculated on these sheets may be overstated. 16 Young Enterprise 2014

17 5. End of Year Reports In order to generate a new set of End of Year Reports you should do the following: 1. Generate and print out an updated "Profit and Loss Report" and "Balance Sheet" from Monthly Reports Make sure that your Payments, Receipts, Creditors and Debtors tables have been updated as well as your closing stock value (which should be zero after liquidation) before you generate these reports. You should bring these reports to your next company meeting (see point 3). 2. Print out a blank copy of the End of Year Accounts Input Form This can be found in the End of Year Reports section of the Company Accounts system. 3. Discuss with your fellow company members how you want to distribute your profits and how you will complete the form This should be done at a board meeting and decided jointly by the company members. See 5.1 below for more information on how to fill this in. 4. Complete the End of Year Accounts Input Form online This should be done online by a company member who has permission to edit the company accounts. When you complete the End of Year Accounts Input Form online you will generate the following reports: Statement of Taxation Liabilities (see section 5.3) Liquidation Report The Liquidation Report summarises the information you will have entered in your End of Year Accounts Input Form to record how you have decided to allocate your company s profits. 5. Present your end of year accounts to your shareholders at the company s AGM Your shareholders will need to approve your end of year accounts which tells them what the return on their investment will be. They may also want to see your most up to date balance sheet and profit and loss account. If the shareholders do not approve your end of year accounts you will have to generate the end of year reports again to reflect the changes discussed at the AGM. 17 Young Enterprise 2014

18 5.1 Allocating Profit Filling in the End of Year Accounts Input Form You can fill in some of the entries straight away (highlighted below in green) before discussing the allocation of remaining profit with your fellow company members. This part of the form shows your company s remaining assets after liquidation Because you have liquidated your company all of your company s assets must be distributed. This part of the form shows how your company s remaining assets will be distributed. To fill in the rest of the table your company needs to make some decisions about how much of your company s remaining assets you will return to shareholders, pay your company members as bonuses and donate to charity. However you choose to distribute your remaining assets you must make sure that Total Assets = Total of all distributions Initially company members will decide exactly how to allocate your company s assets at a board meeting and the following two examples may help you understand how this can be done. An independent and responsible person (for example an Adviser) should be requested to verify the accuracy of the statement, and sign the auditor s report at the bottom of the liquidation report. Bear in mind that the final accounts and distribution of profits must be approved by your shareholders at the AGM before they are finalised. 18 Young Enterprise 2014

19 Example 1 The company has made an overall profit In this example the company s total assets were 440 which must be distributed. After the final expenses, Young Enterprise Taxation and Young Enterprise contributions they had 330 remaining to distribute. ( = 330) At the start of the year they had raised money from 150 shares at 1 each, a total of 150 share capital. The company decides to distribute the remaining 330 in the following way: Bonuses to company members: 100 Shareholders Dividend out of profits: 60 Return of Capital 150 Donations Young Enterprise 10 Other 10 You can see that they have chosen to pay back the shareholders their original 150 investment and also to pay them a dividend (extra payment) of 60. It is standard practice in business to pay back shareholders a dividend if the company has made a significant profit to thank them for their investment and to encourage them to continue to be investors in the company. Usually the more profit a company makes the higher dividend it is able to pay back to its shareholders. In total this company has sold 150 shares which means that each 1 share has a 40p dividend ( 60 divided by 150). This represents a 40% dividend (40p is 40% of 1) The total of the distribution table = 440 which is the same as the total assets 440 which means that the company has calculated these figures correctly. 19 Young Enterprise 2014

20 Example 2 The company has made an overall loss In this example the company s total assets were 170 which must be distributed. After the final expenses, Young Enterprise Taxation and Young Enterprise contributions they had 120 remaining to distribute. ( = 120) At the start of the year they had raised money from 150 shares at 1 each, a total of 150 share capital. This means they do not have enough money to pay back their shareholders in full. The company decides to divide all the remaining assets amongst the shareholders (leaving no money left for bonuses or donations to charity). The company decides to distribute the remaining 120 in the following way: Bonuses to company members: 0 Shareholders Dividend out of profits: 0 Return of Capital 120 Donations Young Enterprise 0 Other 0 You can see that in this example the company has been unable to pay back shareholders any dividend. In fact, shareholders will get back less than what they invested. In total this company has sold 150 shares which means that each 1 share will only be returned to the shareholders as 80p ( 120 divided by 150 = 80p). The total of the distribution table = 170 which is the same as the total assets of 170 which means that the company has calculated these figures correctly. 20 Young Enterprise 2014

21 5.2 A note about Bonuses and Donations You can, of course, work out several different rates of dividend all of which will give different totals available for distribution as bonuses and donations. You should consider how to calculate any bonus payable to students. It might be as a percentage of salary, or perhaps on the basis of hours worked, or meetings attended etc. Although it is against Young Enterprise rules for you to trade on the fact that you intend to donate your profits to charity you can decide to donate your remaining assets to charity after you have liquidated the company. You should bear in mind that the more money you pay yourselves as bonuses or donate to charity the less money you will be able to return to shareholders who are the people who first invested in your company. Decisions about how much to pay in bonuses and donations should be approved by the shareholders at your AGM before the accounts are finalised. 5.3 Statement of Taxation Liabilities This form calculates the total tax (YE VAT and corporation tax) that your company owes to Young Enterprise. The total is shown in the Total Tax Paid to YE box. You will need to fill in your company address at the top and get this form signed and dated. Unless you are advised of alternative local arrangements fro collection of the taxes send the form with a cheque to cover the total to Young Enterprise Support Centre made payable to Young Enterprise (or the Young Enterprise Scotland office for Scotland made payable to Young Enterprise Scotland). YE Corporation Tax is a tax on the company s profits and is calculated at the rate of 10% on the net profit of the company, as indicated in the final Profit & Loss Account. YE VAT is calculated as the YE VAT collected on sales minus the YE VAT paid on purchases. Your YE Corporation Tax and YE VAT payments are very important to Young Enterprise as part of their funds to provide students next year with the experience you have (hopefully) enjoyed. As Young Enterprise is a charity these payments are an essential part of its charitable income. 21 Young Enterprise 2014