Correct way record automated purchases
JKCWS
Member Posts: 14
When i resell some of my online services I have an online account that automatically purchases some services on my behalf. To allow this to happen i have to add credit to the account for some types of purchases.
Other purchases that are made are directly billed to my account.
I'm a UK based sole trader and use simple cash based accounting.
What confuses me is how i should record these (I may well be over complicating things). Do i ::
Create a new account. Import all of the transactions from this platform, create a journal transaction from my bank account account for when cash is added as credit to that account. For purchases that are made from this platform and just directly billed to card, tag them on the bank account as transferred from the new account. For the receipts just attach all the receipts to the purchases on the new account (Or again keep it simple and just download them and keep a safe copy and don't worry about the receipts).
Keep it simple and just upload all of my receipts from the purchases and attach them to the transactions on the bank account (the only complication here is accounting for the credit i add onto the account from my bank account how do i account for that as i wouldn't have a receipt until the credit is used for a purchase)
None of the above!!!
Being a sole trader using cash accounting basis for my returns, it feels like I should be able to just simply use the bank account transactions, but it just feels like the whole needing to add the credit to the other account just confuses things here.
Comments
OK, so i feel there may actually be an option 4 that makes this even easier,
The transactions that are just charged to my card I record as I would any other expense, Upload the receipt and attach it to my transaction imported from my bank statement.
That just leaves the transactions whereby instead they use my credit on the account rather than direct from my bank account. For this I feel like the right way would be to tag the receipt o a new account created just for the credit transactions. Then when i top this account up I show this as a journal transaction from my bank to the new account i have created.
Any thoughts appreciated!!!
Hey @JKCWS , this is unlike any sort of situation I've seen before so I can only advise on what I think is going on based on how you described it. I will say however that I think your fourth and newest option does make the most sense here and that if you're to follow those steps, you should be good to track everything appropriately.