Accounting vs. Tax Software for a Trading Business

My LLC is completed. When looking at accounting software for the business, it appears that there's not a single package that can be used for both downloading TradeStation trades (for tax purposes) and for general accounting needs such as recording expenses and generating monthly business reports (Income Statement, etc.). And, since I'm employing my wife and son, I'd like the accounting package to support payroll. TradeLog has been highly recommended to me for trades. Was looking into QuickBooks for general accounting.

1. Does anyone have experience with these software packages?
2. Do you know if there's a software package that covers both requirements?
3. If you've worked with 2 separate software packages, are there any that integrate, removing the need to manually input information from the trading to accounting software?

Thanks.

tom sisto said:

My LLC is completed. When looking at accounting software for the business, it appears that there's not a single package that can be used for both downloading TradeStation trades (for tax purposes) and for general accounting needs such as recording expenses and generating monthly business reports (Income Statement, etc.). And, since I'm employing my wife and son, I'd like the accounting package to support payroll. TradeLog has been highly recommended to me for trades. Was looking into QuickBooks for general accounting.

1. Does anyone have experience with these software packages?
2. Do you know if there's a software package that covers both requirements?
3. If you've worked with 2 separate software packages, are there any that integrate, removing the need to manually input information from the trading to accounting software?

Thanks.

Click to expand...

Hi Tom, you won't find any packages that integrate these two. You would need to create an interface, but that would be a costly option depending on how many you would need to replicate in your accounting system
quickbooks and Sage are two of the most reputable packages. Kashflow is another however not particularly intuitive
Then there is SAP, which I use, however that is very costly but with an interface could probably do what you want.

Thanks Malaguti. Will check out Sage.

If you use QuickBooks Accounting Software then it would work for both purposes, accounting as well as tax calculation, and it has some other great features fulfilling your accounting needs.

I don't know of any program that does everything and to record trades would be a nightmare in accounting software. Besides, your brokers statements are good enough for HMRC. You just at need to record your non trading expenditure.

Also, QuickBooks is w4nk.

So far as general accounting software is concerned, we've been using Xero here at T2W for a few years now and can't recommend it highly enough.

Xero is decent.

scose-no-doubt said:

I don't know of any program that does everything and to record trades would be a nightmare in accounting software. Besides, your brokers statements are good enough for HMRC. You just at need to record your non trading expenditure.

Also, QuickBooks is w4nk.

Click to expand...

Agree, well said.
No need to enter every trade as a separate entry in books.
HMRC told me the same and that applies to any income.
If external statement evidence is kept, net statement profit
is only figure you need to enter.
That can be on a monthly, or tax year end basis.

Although you have to be careful of commissions and other fees.
If those fees are deducted from your gross profit to give final monthly
or annual net profit on trading statements, then you should not enter them as separate expenses.
If you did you would be claiming fees as an expense twice...not good.
Most (if not all) statements do deduct fees to calculate net profit,
so it won't be an issue most of the time.

Adding to the question above and moving off at a slight tangent I would ask you good people for some help.

This is the first year that I have moved from spread betting to trading on Metatrader 4 with Gallant FX as I want to show forex trading as part of my investment business. My auditor has asked me to convert the trades showing the volume traded as turnover in UK GBP£ r on my balance sheet?
Would I be correct in showing it in this way?

For example, if I buy
1 lot of EURCHF @ 1.00

and sell at 1.10 (price chosen to keep it simple)

can I show this as having had bought 100,000 CHF
and selling 110,000 CHF

which would show at end of year as a 10,000 CHF profit
which I could convert at end of year into GBP£ (I am based in UK) to show my profit.

Would this be acceptable for showing to HMRC at end of year?

gsethi said:

Adding to the question above and moving off at a slight tangent I would ask you good people for some help.

This is the first year that I have moved from spread betting to trading on Metatrader 4 with Gallant FX as I want to show forex trading as part of my investment business. My auditor has asked me to convert the trades showing the volume traded as turnover in UK GBP£ r on my balance sheet?
Would I be correct in showing it in this way?

For example, if I buy
1 lot of EURCHF @ 1.00

and sell at 1.10 (price chosen to keep it simple)

can I show this as having had bought 100,000 CHF
and selling 110,000 CHF

which would show at end of year as a 10,000 CHF profit
which I could convert at end of year into GBP£ (I am based in UK) to show my profit.

Would this be acceptable for showing to HMRC at end of year?

Click to expand...

you might want to check with your auditor as to what his requirements are as they will be knowledgeable as to HMRCs requirements.

When I account for foreign exchange, I need to be a little more precise
what was the exchange rate at the time of opening the trade
what was the rate when it is closed
and what is the rate now (as you should account for realised and unrealised exchange gains and losses separately).
If you are given a rate, then you should use that rate otherwise a monthly exchange rate conversion is more than acceptable. I'm not sure about converting everything at the end of the year, as that doesn't account for fluctuations.
Accounting principles are always the same but the finer detail is reviewed by HMRC on an individual basis, so like I say. Much better to check with them or your auditor who is actually requesting this

Thank you Malaguti,

Sorry what I forgot to add in the above was that my auditors main requirement is teh turnover aspect of the transaction as I have standing costs of software (esignal and other providers) together with office costs but to date my trading has been quite small as have my gains and losses.
Therefore using my original example, would it be okay to report a turnover in my purchase ledger of CHF 100,000 and in my sales ledger of CHF 110,000? I would record the currency rates on the dates of opening and closing as well as end of year (31st March) for conversion to GBP£.

Do you show a turnover figure like this in your accounts?

gsethi said:

Thank you Malaguti,

Sorry what I forgot to add in the above was that my auditors main requirement is teh turnover aspect of the transaction as I have standing costs of software (esignal and other providers) together with office costs but to date my trading has been quite small as have my gains and losses.
Therefore using my original example, would it be okay to report a turnover in my purchase ledger of CHF 100,000 and in my sales ledger of CHF 110,000? I would record the currency rates on the dates of opening and closing as well as end of year (31st March) for conversion to GBP£.

Do you show a turnover figure like this in your accounts?

Click to expand...

My answer doesn't change gsethi
Your turnover constitutes your winning trading income. That trading income is broken down by individual trades. so each one of those trades, converted at the currency rate makes up your foreign equivalent.
I do this per transaction, using a monthly rate and this is OK with HMRC. I also split open vs closed trades for the purposes of realised and unrealised etc
For you, you just need to check what your auditors requirements are..if its annual, then you are fine.

Please could I ask your help in the following regarding my end of year accounts.

This is the first year that I have moved from spread betting to trading on Metatrader 4 with Gallant FX as I want to show forex trading as part of my investment business. My auditor has asked me to convert the trades showing the volume traded as turnover in UK GBP£ r on my balance sheet?
Would I be correct in showing it in this way?

For example, if I buy
1 lot of EURCHF @ 1.00

and sell at 1.10 (price chosen to keep it simple)

can I show this as having had bought 100,000 CHF
and selling 110,000 CHF

can I show this as having turnover of 100,000 CHF in my bought ledger
and showing sales of 110,000 CHF

which would show at end of year as a 10,000 CHF profit which I could convert into GBP£ (I am based in UK) to show my profit.

Would this be acceptable for showing to HMRC at end of year?

deja vue all over again ?