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The Ultimate Guide to Bookkeeping for Locums
No matter what kind of locum GP you are, an organised system to manage your finances and log your expenses is essential, and will save you time and money. Save yourself the prospect of a carrier bag full of Post-It notes and till receipts at the end of the tax year by keeping organised. You’ll also save yourself a cost of paying for someone to sort out the sticky mess.
To help you keep on top of it all, here we answer three of the most common questions we hear GPs asking about bookkeeping:
- What system should I use to record my accounts?
- How should I calculate future expenses?
- And what expenses can I claim as a locum?
There is no single system that suits everyone and however you decide to organise yourself, your process should match the complexity of your affairs.
Locums with only a few assignments (i.e. a handful of longer term locums at the same practice):
- An accounts book or a simple Excel spreadsheet is perfectly adequate. A monthly summary of your charges and expenses, with file copies of your invoices and receipts, will probably be sufficient. If you can set aside an hour or so each month to do this, you will find this to be a painless and worthwhile habit.
Full-time locums working at multiple different practices:
- You should consider using an Excel accounts template – there are many available free to download, a quick internet search will find you many alternatives.
- Or, if you are confident with figures, try a simple accounts software package. We particularly recommend Xero, which is a completely online solution available for a low monthly subscription – all your data is stored in the internet cloud and can be shared in real time with your accountant.
To help you to predict your likely income and outgoings, it can also be worthwhile to prepare a monthly cash flow forecast. This can be useful to anticipate times of the year when you will need to plan carefully to ensure that expenses don’t exceed your available cash.
Don’t forget to keep all receipts for a minimum of 4 years, in case HMRC decide to investigate your returns retrospectively.
So far as bank accounts are concerned, again it’s a matter of weighing up what is sensible for the number of transactions involved. For low business activity, there’s nothing wrong with using your personal account. However, as soon as you start to find it difficult to track items on the account, we recommend that you set up a second account solely for business use – the extra expense will be well worthwhile.
We are often asked what expenses are allowable against tax. The detailed rules are complicated and if in doubt you should consult a professional advisor. However, in principle, expenses incurred 'wholly and exclusively' for your locum work are generally allowable. For example:
- any equipment bought (computers, laptops, tablets or any other office furniture)
- any professional subscriptions (GMC, BMA, RCGP etc.)
- any indemnity or professional insurances (MDU, MPS, etc. )
- attendance at conferences/seminars ( only provided this is wholly and exclusively for business purposes and for the purpose of extending existing knowledge)
- If you use a room as an office, a flat rate expense as well as any room/office hire costs
- accountancy fees
Other admin expenses that are usual to claim back are:
- mobile phone or broadband
- an allowance for dry cleaning / laundering clothing
- any secretarial work or postage costs incurred with the administration side of your work
For business mileage, the rates approved by HMRC are currently 45p for the first 10,000 miles and then 25p thereafter, so it's normally best to keep a log of any business mileage and claim this on the tax return. Alternatively, you can claim a percentage of car costs such as MOT, insurance, etc. and this percentage will relate to the amount used for business purposes (i.e. if used 75% personally and 25% business then you could claim for 25% of these costs). Capital allowances are also available based on the CO2 emissions of your car.
So, with these points in mind, use the checklist below to keep on top of your finances–
- devise a system to manage your business finances which is no more complicated than it needs to be
- make it a habit to update your records and file paperwork at least once a month
- keep track of your incomings and outgoings
- get familiar with what expenses you can claim
- consider opening a second bank account if payments are hard to track
- if your affairs are very complex, consider employing an accountant
Follow these guidelines and make sure that you don’t lose any sleep at the end of the financial year!
Do you have any specific questions? If you are a member of Network Locum (now Lantum) then email our free accountancy advice service at accountant [at] networklocum [dot] com and you’ll receive an answer within 24 hours or 1 business day. Alternatively, if you are a member of Melissa and Will’s GP locum group on Facebook, you can ask your question there and one of the accountants will get back to you.