Overview screen

You can move the order of the boxes on the overview screen by dragging and dropping - we think it's useful to have the Profit and Loss and Expenses at the top and the Cashflow at the bottom - but you might prefer a different order!

Quicklinks

From the Overview screen, you can access the most frequent transactions in FreeAgent by clicking on 'Quicklinks' and selecting the relevant item:

Marked for Approval

When importing bank statements (and also when transactions are imported automatically), you can select for FreeAgent to 'guess' where transactions are posted:

Once the transactions are imported, if FreeAgent has been able to guess an explanation this will be marked for approval - you will then need to go into FreeAgent and actually approve the transactions (or amend if FreeAgent has guessed incorrectly):

Common Transactions

Dividends

To post dividend payments, select Type = Money Paid to User, Payment to = Name of Shareholder, Reason = Dividend

Drawings

If you take money out of the company for your own use, select Type = Money Paid to User, Payment to = Name of Shareholder, Reason = Payment to Director's Loan Account.

Expenses

If you are repaying expenses you've incurred on the company's behalf, select Type = Money Paid to User, Payment to = Name of Shareholder, Reason = Expenses.

Director's salary

If we're filing your payroll for you, when you pay yourself your salary select Type = Payment, Category = Director's Remuneration.

If you are using FreeAgent to prepare your salary, select Type = Money Paid to User, Payment to = Name of Shareholder, Reason = Net Salary and Bonuses.

Payment of VAT

If you're paying your quarterly VAT bill, you should select Type=Payment, Category = VAT

Viewing transactions in FreeAgent

It can sometimes be very useful to view transactions account by account in FreeAgent.  To do this just follow these instructions:

Go to Accounting > Reports:

Select 'Show Transactions':

Select the relevant account eg '363 Bank/Finance Charges':

You can then select the relevant period eg 'By Accounting Period', 'Current Year So Far' etc

Smart User Payments

When you select 'Money Paid to User' in FreeAgent you have an option to select 'Smart User Payment'.  

FreeAgent app for your phone

FreeAgent have a useful app for your android or iPhone which enables you to:

• view, create and send invoices
• view and record out-of-pocket expenses and mileage claims
• capture photos of expense and mileage claim receipts
• view and add to your list of contacts
• re-bill expenses and mileage claims
• view the balances of your bank accounts in FreeAgent
• explain bank transactions (this feature works best once you've set up a Bank Feed in FreeAgent)
  

To find out more about how this works, just click here.

When to post a purchase invoice and when to post directly from your bank

One of the things that confuses a lot of clients is when they should post a transaction from a supplier as a bill or an expense and when they should post it directly from the bank.

Well, our advice is normally as follows:

• If you pay for any business costs yourself, this should be posted as an Expense.
  
• For other bills, if you're going to pay your supplier immediately or within a very few days we'd suggest you post the transaction straight from your bank reconciliation screen by using the type 'Payment' and selecting the correct overhead code. If you click on 'Add attachment' you can then upload a copy of the invoice or documentation if you want to.
• If you need a record of who you owe money to or if you aren't going to pay the invoice for quite a few weeks, then post the invoice as a Bill. Then when you pay it you can use type 'Bill Payment' and simply find the invoice to post the payment against.
• If you account for VAT on your invoices rather than on the cash paid, then you may want to post all transactions as supplier invoices as this will ensure you claim the VAT on any purchases at the earliest opportunity.
• If the payment is recurring eg insurance we don't recommend posting an invoice for such transactions.  Just reconcile them directly from your bank - FreeAgent should learn where to post these transactions once you've posed the initial payment.
  

Whichever way you chose to do this, make sure you reconcile the bank statement item against the right transaction - otherwise you could end up posting the bank statement item directly to your profit and loss account and your purchase invoice will still be outstanding - so you'll end up accounting for the cost twice!

Fixed Assets

A Fixed Asset is something you buy which will have a benefit to the business for more than one reporting period (normally a year). So for instance if you buy a laptop to do all your bookkeeping on Xero, that’s a fixed asset. Also desks and chairs are fixed assets.

Be careful not to confuse fixed assets with stock. If your business is selling desks and chairs then when you buy a desk to sell on to a customer that counts as stock (or inventory). However when you buy a desk to sit at and you assume you’ll be sitting on this for quite a few years (not constantly!), then that desk counts as a fixed asset.

We recommend you should only post an item to fixed assets when it costs more than £200.  However this is subjective and is only a guideline.

The codes in FreeAgent are in the range 602-1 to 602-4.

How much does the business owe you (or you owe the business)?

It's very important to keep a check on how much the business owes you and to make sure you don't end up owing the business money (there can be nasty tax traps if you end up owing the business money - see more about this here).

The first report to look at is the Balance Sheet. To review the Balance Sheet go to Accounting > Reports and then 'High Level' and Balance Sheet.

You can change the date you run this report - we'd suggest looking at it both for the previous year end and the current position:

In this report you need to add up all the accounts which have your name next to them. So let's look at the balances for Dan Ashcroft as shown below (any balances on the left hand side - debit - means you owe the business money; any balances on the right hand side - credit - means the business owes you money):

• Salary and Bonuses - Dan owes the business £1962
• Director Loan account - Dan owes the business £525
• Expense Account - the business owes Dan £8532

So overall the business owes Dan £6045.

To see how the balances are made up, simply click on each balance to take you to the individual transactions.

PLEASE BE AWARE THAT THERE SHOULDN'T NORMALLY BE A BALANCE ON THE SALARY AND BONUSES ACCOUNT 902.  If there is, it may be that you have misposted your director's salary here and you will need to repost this to the profit and loss - this will usually be either account '352 - Director's remuneration' or an account called Wages and/or Salaries.

If the business owes you money then you can make a payment to clear these balances from your bank account. Post the transaction to your Director's Loan Account and you can then ask us to reallocate this payment against the individual balances in FreeAgent (eg expenses etc) using a journal.

If you owe the business money, then you may prefer to clear the balances with a dividend. However rather than paying yourself the dividend you can declare this from 'My Money' > 'Dividends' and this will post the entry to your Director's Loan Account - so reducing the amount you owe the business. You can then ask us to reallocate this payment against the individual balances in FreeAgent (eg expenses etc) using a journal.

However please remember to check the amount available for dividend in your overview screen!

Importing bank statements

Occasionally you may need to import a bank statement (especially before you set up your bank feed).

To import a statement, select 'Banking', and then the bank account for which you're going to upload a statement - select 'Upload Statement':

Alternatively, choose 'Upload a Statement' from the Quick Links menu on the Overview screen. If you use this option, FreeAgent will ask you to choose which bank account to upload to.

You can import bank statements in the following formats:

• OFX (Open Financial Exchange) - you might see this referred to as Quickbooks, Microsoft Money 2005 or Sage Line 50.
• QIF (Quicken Interchange Format), which is an older format - this is sometimes called Quicken 98 or 2000, or Microsoft Money 2003.
• CSV (Comma-Separated Variable) for some other banks that don't support OFX or QIF - if you have to upload as a csv file then you may need to create or edit your file into the following format:
• Column A, Date: Use the date format dd/mm/yyyy
• Column B, Amount: Formatted as 'Number' to 2 decimal places, transactions for money paid out of the bank account should have minus signs in front of them (-) and transactions for money coming into the bank account in should not have minus signs in front of them
• Column C, Description

Deleting a bank transaction

You may occasionally need to delete a bank transaction - for example, if it's a duplicate transaction.  You can see how to do that here.

Splitting bank transactions

You may sometimes need to split a transaction between two categories - to see how to do this just click here.

Posting multiple bank transactions

Selecting individual transactions

You may have multiple transactions showing on your bank account which should all be posted to the same account.  As long as the VAT treatment is the same for all the items, you can do this quickly by ticking next to all the transactions and then explaining the transactions using the panel on the right hand side.

Posting multiple transactions from one transaction

Alternatively, when you click on a bank transaction you may find that there are other transactions which match the item you are reconciling - if there are you'll see a message on the bottom right of the section:

If you click on 'More Options' and scroll to the bottom of the page, you'll see the list of other transactions which match the item you are reconciling.  Ensure you have selected the correct Type, VAT and Category for the item you are reconciling, enter the description you would like the item to have (you can leave this as it's defaulted) and then simply tick the other items you wish to reconcile with the same details and select 'Create New Explanation':

Bank Transfers

If you have two or more accounts and transfer funds between these, it's important to post these the correct way in FreeAgent.

Please be aware you should always post the transaction from the outgoing account ie the one that you transferred the money from!

In the account where you've transferred the money from, select Type = Transfer to Another Account and then select the amount:

FreeAgent app

FreeAgent have an app you can use on your android or iPhone.  With the app you can capture receipts and create expenses; create and send invoices; and view and explain your bank transactions.  Once you've downloaded the app, just log in using your normal log on and password.

Housekeeping

We recommend you review your bookkeeping regularly - especially if you're VAT registered.  So what do we recommend you look at.  Well, we'd suggest you review the following at least every month:

Unexplained and unapproved bank transactions

Go to Banking, select the relevant bank account and then select Show = 'Unexplained' or 'Marked for approval' > All Time Periods:

The bank transactions which are marked for approval are transactions where FreeAgent has 'guessed' the explanation.  If you're happy that the explanation is correct, you can then approve these transactions.  Alternatively if the explanation is not correct, you can amend this.

Feel free to contact us if there any transactions you need help with.

Once you've reconciled all your transactions, make sure the bank balance in FreeAgent is the same as your online banking at the month end.

Troubleshooting if your bank doesn't balance

If the bank balances don’t agree to your online banking at the end of the month or year, you need to take the following steps:

If you still can't reconcile your bank and would like our help, you will need to provide us with the following:

Customer invoices

Go to Work > Invoicing and then select Show = Open or Overdue

Review all your outstanding customer invoices to make sure they're valid and haven't been paid and don't need crediting or amending.

Supplier invoices

If you post your supplier invoices in FreeAgent, go to Bills and then select Show = Open or Overdue Bills and From all time

Review all your outstanding supplier invoices to make sure they're valid and haven't been paid and don't need crediting or amending.

Expenses

We recommend you post your expenses (eg mileage, subsistence and any business expenses you've paid personally) at least once a quarter (and preferably once a month).  However remember only to include items which have been paid by you personally - any items paid for by the company will be posted via Bills or via reconciling the business bank account.

We also recommend you reimburse any personal expenses regularly 

To find out how to post your expenses, just go here.

VAT return

To review your VAT return, either select Show = relevant VAT period or find the VAT return in the list and click on it.

We recommend you review the full report prior to filing your VAT return (and remember, we're more than happy to review this with you before you file it - we simply ask that you do the checks mentioned above first).

Once you are happy that your VAT return is correct, simply click on the green 'File online with HMRC' button at the top right. 

You will then need to enter your government gateway ID and password.

We'd also suggest you wait to get the filing confirmation - stay on the screen for a couple of minutes and refresh and you should get a nice message saying it's been filed successfully!  If you have any problems at all, please let us know.

Search button

There's a handy search box in the top right of the FreeAgent screen (just to the left of your name) - just pop in a name or an amount (or anything else you can think of!).

Knowledge Base

As a final port of call, FreeAgent also has a great knowledge base.  Simply go here and search for the relevant section.

And of course you're always welcome to contact us if you need any help - just give us a call and we'll usually be able to put you right in a few minutes!

Sometimes you'll be working for an agency or customer which is self-billing.  What that means is that they raise a sales invoice on your behalf - so you don't raise any sales invoices in FreeAgent.  However they should provide you with an invoice for every payment they make to you.

When you receive payment from a customer who is self-billing, simply reconcile this directly to sales in FreeAgent.  We also recommend you attach a copy of the invoice to the transaction in the bank.

At the year end, we'll then request details of any payments you're due from your end customer relating to work prior to your year end and we'll make an adjustment to include this in your accounts.

Where your end client is self-billing, you may want to use FreeAgent to record the time and expenses you are expecting to be paid in their next invoice.

You can see a guide as to how to use Projects to do this here.

This guide is also useful if you're looking to use Projects to charge your clients where you're not self-billing.  In this case you may want to set up multiple projects rather than just one.