Common Xero bank errors and queries

I am often approached to help with or solve errors on Xero.  In this first of a series of three blogs I cover common Xero bank errors and queries.   Parts 2 and 3 will cover Xero supplier and customer errors and queries and VAT errors and queries respectively.

Bank balance does not match to the statement balance

Firstly, would you know whether your bank balance in Xero matches your real bank balance, and secondly why should this be important to you?

To deal with the second point first – this check is singularly one of the most important things to do when using Xero, especially if you are manually uploading your bank statements into Xero.  If your bank balance in Xero does not match your real bank balance then something has gone wrong; a transaction could be duplicated or missing, and to put it bluntly, your accounts are wrong, which means more work for your accountant at the year-end.

To check whether the balance matches you need to look at your bank on the Dashboard in Xero

 

 

 

 

 

 

and note what the Statement balance line is (not the Balance in Xero line – we’ll come to that one later), and compare this to the actual bank balance at the same date on your bank statement or online banking.

If the Statement balance line and the actual bank balance figures match, then you are doing okay.

If the two figures do not match then either the opening balance is wrong or there is an error in the transactions imported into Xero.  Follow the steps below to find the error:-

  1. If you are just starting out check the opening bank balance is entered correctly. If it is not, then amend it.
  2. Look on the account transactions tab to see when the Statement balance last matched the actual bank balance

To get to the account transactions tab click on the 3 little dots above the Balance in Xero line on the bank account on the dashboard and click account transactions. Make sure these are in date order (click on date to re-order).

  1. Run the Bank reconciliation Summary report for 1 month after the date the balances last matched and compare the balance on the report to the actual bank balance at the same date. If the balances match then run the report for the following month and check again.  Keep doing this until you find a month where the balances do not match – the error must have occurred within this date range.
  2. Narrow the range down until the error is identified. It will usually be:-
    1. A missing transaction
    2. A duplicate transaction
  • A transaction deleted in error
  1. A transaction manually reconciled in error
  1. To correct the errors above
    1. Import a bank statement file for the missing transactions
    2. Delete a duplicate transaction
      1. click on the cross next the date in the bank reconcile screen or remove and redo from the accounts transaction tab
  • Restore a transaction deleted in error
    1. Go to manage account and click bank statements
    2. Put a tick in the box next to the deleted statement line
    3. Click restore
  1. Delete the manual entry that has been reconciled
    1. Go to manage account and click bank statements
    2. Put a tick in the box next to the reconciled statement line
    3. Click delete
  2. Repeat as necessary

Now your Statement balance line should match to your actual bank balance at the same date.

Balance in Xero line does not match to Statement balance on the Dashboard

In most cases the difference between the two bank balances shown on the Dashboard in Xero is the (in this case 27) items to reconcile.  Once these items are reconciled then the balances should agree, and Xero will tell you that you have done a “Great job”!

If they don’t then check the accounts transactions tab for unreconciled manual amounts (via the 3 little dots on the dashboard) and clicking on status to put the unreconciled items at the top.

These items are fine to be there if the transaction has been created in Xero but has just not appeared on your bank account in Xero yet.

However, if there are manual unreconciled items in there that you know have already appeared on your bank reconciliation then these items need attention.  They often occur when new transactions are created during a bank reconciliation rather than matching to items already manually created in Xero (perhaps because they are for a slightly different amount).  To delete any duplicate manually transactions put a tick in the box on the left hand side and click remove and redo.

How to code a supplier payment during the bank reconciliation when you haven’t yet received the invoice or are making payments on account

From the bank reconciliation screen, click on add details on the bottom left hand side of the blue box.

  • Change the “Spent as” from Direct payment to Overpayment.
  • Enter the supplier name as it appears in your contacts list in the “To” box
  • Enter a description of why you have overpaid (i.e. paid twice in error or awaiting invoice)
  • Check the amount and that the account code is accounts payable
  • Click Save transaction and reconcile

This transaction will then show as a negative on your aged payables report.

The next time you approve an invoice for this supplier Xero will inform you that you are in credit with them and you can choose to allocate the earlier overpayment against the new invoice (if it is the correct invoice to set against the credit).

If you need any help with Xero please contact me at the Carlisle Office or email me michelle.ruddick@saint.co.uk

 

R&D tax credit restricted

The amount of repayable R&D tax credit for Small and Medium Sized Enterprises (SMEs) will again be restricted by the amount of the claimant company’s PAYE and NIC liability from April 2020.

The new limit will be set at three times the company’s total PAYE and National Insurance contribution (NICs) payment for the period.

New capital allowance for commercial buildings

A new 2% straight line tax deduction is being introduced for the cost of construction or renovation of commercial buildings and structures.

This tax break will apply to eligible construction costs incurred on or after budget day and will be available to commercial property landlords as well as trading businesses. The cost of the land is specifically excluded.

Annual Investment Allowance increased to £1m

The Annual Investment Allowance (AIA) which provides businesses with a 100% write off against profits when they acquire plant and machinery has been temporarily increased from £200,000 to £1 million for two years from 1 January 2019. This will again mean that the timing of expenditure will be critical. It may be advantageous to delay expenditure until after 1 January 2019 to get full benefit in certain circumstances.

er, the current enhanced capital allowance for energy efficient plant will be abolished from April 2020. A further change is that the writing down allowance for special rate pool equipment, broadly long-life assets and fixtures in buildings, is being reduced from 8% to 6% from April 2019.

Find out about Xero on our ‘Xero Drop In Day’ – 5th December 2018

Join us at our next Xero Drop In Day – tea and coffee available
on Wednesday 5th December 2018
at
Saint & Co, Sterling House, Wavell Drive, Rosehill, Carlisle, CA1 2SA
9.00 am – 6.00 pm

Are you an existing user of Xero Cloud Accounting Software?

Do you need help using the software or would you like to learn more about how cloud accounting could boost your business?

Saint & Co are Xero Platinum Partners.   Thanks to our newly acquired platinum status more and more of our partners and staff are “Xero” certified.

Drop in and chat to our friendly staff who will be on hand all day to help with any queries or questions you may have about using the software.

If you do not currently use Xero, why not book onto one of four hour long,demonstrations being held at 9.00, 12.00 noon, 3.00 pm and 6.00 pm.  Let us introduce you and your business to this cloud accounting software which is becoming more and more popular with our clients.

Visit our events page for more details.

Capital Gains Entrepreneurs’ Relief Changes

The Chancellor announced in his 2018 Budget that the minimum qualifying period for CGT entrepreneurs’ relief will be increased from 12 months to 24 months for disposals on or after 6 April 2019.

There are further changes affecting shareholdings in personal companies. In addition to the individual holding 5% or more of the ordinary share capital and voting control they will also now be required to be entitled to 5% or more of the company’s distributable profits and assets in a winding up.   As now the individual must also be an officer or employee of the company concerned; and the company must be a trading company or the holding company of a trading group.

No changes in tax rates

The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.

There had been rumours that the dividend rate might be increased, but dividends continue to be taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate. Note that only the first £2,000 of dividend income is now tax free.

The annual ISA investment limit increased to £20,000 from 6 April 2017 and remains at that level for 2019/20. Dividends on shares held within an ISA continue to be tax free.

The much rumoured further restriction in pension tax relief failed to materialise.

Personal allowance and higher rate limit increased early

The Government’s manifesto pledge back in 2015 was that the personal allowance would rise to £12,500 in 2020 and the higher rate tax threshold to £50,000. However, the Chancellor has decided to bring forward these increases one year early from 2019/20, taking an estimated 1 million taxpayers out of higher rate tax.

Note that up to 10% of the personal allowance (£1,250 from 6 April 2019) may be transferred from one spouse or civil partner to the other if unused and the transferee is a basic rate taxpayer.  As announced last year, this transfer is now available on behalf of deceased spouses and civil partners.

A quick look back at the Borderway Agri Expo

On Friday the 2nd of November, Saint & Co. attended the 12th annual Borderway Agri Expo.

As one of the UK’s largest agricultural events, it was a terrific opportunity for some of the Saint team to meet existing and potential clients already working in the industry, and to offer accountancy advice specifically tailored to the farming community.

The event itself was a lively and vibrant showcase of the best quality sheep and beef cattle, along with the latest in farming practice developments, cutting-edge machinery, equipment, and technology. What’s more, a number of important discussions were led around topics such as the environment, exports, and livestock marketing.

Our Farm Advisor, Will Robinson, had this to say:

“Once again, the Borderway Agri Expo was a truly fantastic event, with many of our current – and some prospective – clients coming to see us at our stand for a chat. Some wanted to discuss Making Tax Digital and Xero, while others were keen to learn more about the Farmplan accounting software. Lucky for us, Farmplan had their stand right next to ours, which worked out well.”

“We had lots of visitors, and our branded merchandise (torches and bottle openers) were very popular. In fact, we ran out in the first hour! We also ran a free prize draw, with one lucky person scooping a £100 gift voucher at the end of the event.”

“All in all, it was a great day – we met a number of passionate farming professionals and provided plenty of expert guidance. I’m sure next year’s Expo will be even bigger, and even better. I’ve already circled it in my diary.”

Were you at the Borderway Agri Expo and missed us? Get in touch to chat with one of our farming experts.

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