Welcome to Manager
I was in a similar position to you last year, although my knowledge was slightly ahead of yours in that having done accounting before I understood the difference between Purchase Orders and Purchase Invoices.
As Tut says, your first step is to learn basic accounting to understand the basic accounting concepts such as purchase orders and purchase invoices.
What I found worked for me was the following:
- Setting up Manager with a dummy company and playing with the transactions for a couple of days gave me a good understanding of how Manager works.
- Once I had setup my real Company accounts as I thought that I needed them to be setup, I then contacted my accountant and we went over the accounts and corrected anything that I had got wrong and explained why.
- At the end of the year, I realised that while I was recording the transactions and was obviously compliant for VAT and Corporation Tax purposes I found that I needed to break up my expenses into sections (look at sub accounts in releases) so that I could separate company operating expenses that incur regardless from expenses that are incurred in the process of making a sale. I also created a section for Salary, Business Mileage and Use of Home that is money that my company pays to me so while legally an expense to the company, its income for me as the person! Separating them made it easier to determine where I can make savings and where I can increase income. So you will need to review how you want to setup your chart of accounts probably a few months after you have run the business with Manager.
In short, you need to learn basic accounting from the website that Tut suggested as well as other websites, then setup a dummy company account and play with the settings. Once you have passed that stage, you then setup Manager for your real company and configure as you think is appropriate. Then you call your accountant in and get them to review how you are doing things. At the end of the first year (not necessary every year), book a meeting with your accountant and go through your chart of accounts and see if they are optimally setup as you will know better after running the company for one year what expenses and income you will be getting and what information you actually want to obtain from the Summary Page.
Onto some specifics. Avoid some common mistakes.
Purchase Invoice reference number should be the invoice number supplied by your supplier. Many people myself included when moving from Excel to an accounting program tend to continue using Invoice 1, Invoice 2, Invoice 3 numbering format. This is wrong because you do remittance advice for example (a document that you send people to say that you have paid their invoice if you do it by banking transfer), the remittance advice will use the reference number on your invoice. Their Invoice Number will mean something to them - Invoice 1 reference will mean nothing to them!
Also Manager will record the invoices by order of date anyway, so there is no point to invoice 1, invoice 2 concept.
Use an accountant - both at the beginning and at the end of the first year for Manager. Can’t stress this enough. Many people waste a lot of time and money trying to do everything themselves instead of paying the expert to get it setup correctly from day one. This also applies to determining whether you should setup your business as a sole trader, LTD Corporation or Parternship etc.
You do not need to create a purchase invoice to record an expense. For example, if you get bank charges, you do not get an invoice from the bank, so the procedure would be to go to cash accounts, spend money and select bank charges and put in the Payee and Amount. A purchase invoice is only meant to be used when you receive and invoice from a supplier. A purchase order is used when you want to put an order on the system, but you are not planning or ordering the product just yet and thus don’t have an invoice from the supplier yet.
Journal Entries - probably your accountant will be the only person that will actually use the journal entries. You can do almost everything in Manager without using Journal Entries. Journal Entries is meant for transactions that cannot be done anywhere else in the program.
- You create a company by clicking Add Business and this will create a default set of accounts with the name of your company.
- Go to Customise and add the modules that you want to use and remove any modules that you don’t want to use
- Go to settings and open each and every item and configure it as you think is appropriate before you do any transactions in Manager.
- I would pay particular attention to the Chart of Accounts and look at Sub Accounts and Custom Control Accounts (see the release notes for further details) as this will enable you to setup the accounts so that you are compliant as far as tax goes, but more importantly, you can see what you are spending money on and what you are making money on and you can change suppliers or review your sales tactics. The whole point of the summary page and the reports is to help you identify where you can make savings on your expenses and how to increase your income. To do this, you need to setup the chart of accounts so that you can easily see where your money is going.
Hope all this helps.