Method to calculate total sales of limited company

sma_tier1 · Post by **sma_tier1** » Wed Jun 06, 2012 5:00 pm

Hi friends,

I have a doubt in calculating the total sales value of my limited company.

Basically, I have my own limited company and I take my salary and dividend from my business account. How is the total sales value of a limited company calculated for the past 12 months (June 01 2011 to May 31 2012).

A) The total value of all those invoices which were raised in the period(June 01 2011 to May 31 2012), irrespective whether the payments were received within the period or not.

OR

B) The total value of all those invoices which were raised in the period(June 01 2011 to May 31 2012) as well as received payment within the period itself(June 01 2011 to May 31 2012).

OR

C) The total sum of all those payments received in the business account, irrespective of the dates of the invoice.

Please help by clarifying this.

Thanks,
SMA

Post by **Lucapooka** » Wed Jun 06, 2012 5:05 pm

I'm not an accountant but I can tell you that it's C

A won't apply as anyone can invoice for any amount that may never materialize - so is no indication of actual income.

B won't apply as that might include income that was garnered outside the 12 month period in question yet conveniently invoiced within that period for the purposes of embellishment.

In summary, it's the actual money you receive into your bank in a given 12 month window.

sma_tier1 · Post by **sma_tier1** » Thu Jun 07, 2012 10:29 am

Thanks Lucapooka for your reply.

Can any accountant here confirm this please.

Post by **Lucapooka** » Thu Jun 07, 2012 10:43 am

Just to clarify, my response was with regard to the income requirements for a Tier 1 migrant rather than business accountancy practices in general. I would urge you to take professional advice on your specific circumstances.

sma_tier1 · Post by **sma_tier1** » Thu Jun 07, 2012 11:04 am

Thanks again Lukabooka.

To elaborate with examples, I have given the following scenario below. Suppose I have the following invoices raised by my limited company.

Inv001 Dated 15-May-2011. Invoice value is £1000. Paid into my business account on 15-June-2011.
Inv002 Dated 15-June-2011. Invoice value is £2000. Paid into my business account on 15-July-2011.
Inv003 Dated 15-Nov-2011. Invoice value is £3000. Paid into my business account on 15-Jan-2012.
Inv004 Dated 15-Feb-2012. Invoice value is £4000. Paid into my business account on 15-Mar-2012.
Inv005 Dated 15-May-2012. Invoice value is £5000. Paid into my business account on 15-June-2012.

Now, the period for which I am showing my income is "01-June-2011" to "31-May-2012". Considering the above invoices dates and their payment dates, what would be my actual income for the given period.

A) £1000 + £2000 + £3000 + £4000 = £10000 (Here I have included all the payments made into my account during the given period irrespective of the invoice dates)
B) £2000 + £3000 + £4000 + £5000 = £14000 (Here I have included the value of all those invoices which were raised within the given period. I have not considered where the payments of every invoice was done within the period or not.)
C) £2000 + £3000 + £4000 = £9000 (Here I have included the value of all those invoices which were raised within the given period and also ensured that they were paid within the period. If any invoice is not paid within the period, then I have ignored such invoice.)

Please let me know what is my exact income now. (I am a Tier 1 Genenal visa holder.)

Post by **Lucapooka** » Thu Jun 07, 2012 11:17 am

£1000. Paid into my business account on 15-June-2011.
£2000. Paid into my business account on 15-July-2011.
£3000. Paid into my business account on 15-Jan-2012.
£4000. Paid into my business account on 15-Mar-2012.

the above refer to the period "01-June-2011" to "31-May-2012".

However, if you are short, I suggest claim income from 16 June to 15 June as this way you can have an additional 4000. You lose the invoice from May 2011 but include the invoice from May 2012.

sma_tier1 · Post by **sma_tier1** » Thu Jun 07, 2012 11:56 am

Thanks again Lukabooka for keeping patience and replying my queries.

Thanks,
SMA

vin123 · Post by **vin123** » Thu Jun 07, 2012 12:14 pm

This comes under general "accounting practice". For e.g committed sales figure and the actual income received may differ for a FY, and of course HMRC gives you the flexibility to "adjust" figures based on the current tax year and the projected revenue shown in the books for the next/coming tax year...

So all the answers are correct in my view ( I am NOT an accountant !) except C - becuase accounting term revenue point is normally set based on invoice "send" date, not payment received date. If you did not get paid, then that gets accounted separately under.
But if you are single person limited company and your clients normally pay your invoice without corrections or adjustment within a months timeframe, I would stick to the sales figure that gives maximum sales projection for the year.

For e.g - You send an invoice to Company ABC in March-2012 company ABC decides to "adjust" payment on few of the items in May-2012 and thus you would have a correction in your sales, which inturn will have a VAT payment impact you would be adjusting in FY coming.

Post by **Lucapooka** » Thu Jun 07, 2012 12:28 pm

Yes, I would agree but I'm not sure that is how the UKBA (rather than the HMRC) would calculate his earnings in a precisely defined 12 month period. My understanding is that it has to be actual income received within that given window rather than sums invoiced and outstanding or awaiting adjustment. Otherwise the capacity for favourable manipulation might be difficult to prevent. I would hope that others might comment or add to this discussion.

vin123 · Post by **vin123** » Thu Jun 07, 2012 3:04 pm

For UKBA, it is always simple - no confusion since it is always at a personal level.

Payslip + Dividend vouchers showing cashflow into a personal account of the applicant. Applicant to carry/produce personal bank statements to support/demostrate the same.

So Dividend is assumed to be a tax paid income shown from the company books whether accounted monthly/quaterly and filed at companies house/HMRC annually.

sma_tier1 · Post by **sma_tier1** » Fri Jun 08, 2012 11:28 am

Thanks vin123 and Lukabooka for answering it to me.

sma_tier1 · Post by **sma_tier1** » Thu Jul 12, 2012 11:40 am

I got my visa extension today from PEO Croydon. Thanks a lot to all the members of this board. My special thanks to vin123, Lucapooka and params0073.
You were all lovely in helping me go through this visa process.

Thanks,
SMA

priyakute · Post by **priyakute** » Thu Jul 12, 2012 3:52 pm

Hi sma,

How did consider the sales period based on the reply above. Pls reply i am also in same kind of situation.

Thanks
Priya

sma_tier1 · Post by **sma_tier1** » Thu Jul 12, 2012 3:58 pm

Hi priyakute,

If you are taking salary cum dividend from your limited company, then you dont have to worry about the sales period.
The CW is only asking your salary slips for 12 months, dividends taken for that period, personal bank statements showing the money coming in. He did ask for P-60 (no problem, if not available).
CW did not ask for the invoices.
Let me know if you need any more details.

Thanks,
SMA

ram007 · Post by **ram007** » Thu Jul 12, 2012 9:53 pm

Hi SMA,
Congratulations on your VISA extension. Could you please let me know the list of documents submitted along with your application. Appreciate your response.

sma_tier1 · Post by **sma_tier1** » Fri Jul 13, 2012 9:29 am

Hi ram007,

These are the list of documents I submitted. (I assume that you are claiming your income under our own limited company)

Original Tier-1 General form duly filled
2 Photos
Passports
Salary Slips for the period
All Dividend vouchers for the period
Personal bank statements for the period showing the money coming in
P-60 (no problem if not available)
Accountant letter showing dividend summary
Accountant letter showing salary summary
Accountant letter confirming that you are the owner of the company, mentioning your gross/net salary
Your limited company profit loss statement (the CW did not ask for this, I gave him of my own though he was not interested)
Personal bank statement for maintenance funds

Thanks,
SMA

ram007 · Post by **ram007** » Tue Jul 17, 2012 7:34 pm

Hi SMA,

Thank you very much for your response. Yes I am claiming income under my own limited company. Do we need business bank account statements?

Thanks,
Ram

sma_tier1 wrote:Hi ram007,

These are the list of documents I submitted. (I assume that you are claiming your income under our own limited company)

Original Tier-1 General form duly filled
2 Photos
Passports
Salary Slips for the period
All Dividend vouchers for the period
Personal bank statements for the period showing the money coming in
P-60 (no problem if not available)
Accountant letter showing dividend summary
Accountant letter showing salary summary
Accountant letter confirming that you are the owner of the company, mentioning your gross/net salary
Your limited company profit loss statement (the CW did not ask for this, I gave him of my own though he was not interested)
Personal bank statement for maintenance funds
Thanks,
SMA

sma_tier1 · Post by **sma_tier1** » Wed Jul 18, 2012 8:54 am

Hi ram007,

Business bank statements are not needed.

I had taken the business bank accounts with me. But the CW did not ask for that and hence I did not give it to him.

Thanks,
Syed

contactrizwan79 · Post by **contactrizwan79** » Sun Jul 22, 2012 12:00 pm

Hi Syed,

It was a really very use full thread for me, I have taken three dividend but my first dividend was from the last FY of my company and the other two small dividend is from the current FY.

Could you please tell me what was your salary and dividend structure and was that all Invoices from the same claiming period ?

Awaiting for your response.

Regards
ContactRizwan79

jeno · Post by **jeno** » Sun Jul 22, 2012 3:25 pm

Hi SMA

Congratulations for your extension. I am running my own limited company and drawing dividend on a quarterly basis. I would really appreciate if you could send me a sample dividend voucher template which I can use for my extension. Thank you very much in advance.

sma_tier1 · Post by **sma_tier1** » Mon Jul 23, 2012 10:16 am

Hi ContactRizwan79,

1) If your dividend credit date is within any consecutive 12 months of the immediate last 15 months from the date of your application, then you are okay.
i.e, if you are applying for extension on 01-aug-2012, then you dividend credit date should be within the period 01-aug-2011 to 31-07-2012 (assuming that you show the income period as the immediate last 12 months)
You don't have to worry whether the dividend is part of last financial year of your company or current financial year of your company. CW will not be interested in the financial year of your company.

2) In my case, I showed the income of those invoices which were paid during the period of 12 months. Some of my invoices were before the 12 month period, but the payment was credited within the 12 month period.

i.e, going by the example mentioned in point 1, if you have a invoice dated 15-Jul-2011, but it is paid on 15-aug-2011, then you should include this as part of your income. On the other hand, if you have a invoice raised on 20-Jul-2012, but is not paid till 31-07-2012, then you can't include this as your income.

Hope I answered you queries. If not, let me know.

Thanks,
Syed

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Method to calculate total sales of limited company

Method to calculate total sales of limited company