Accounting

Clarth provides professional double-entry accounting tailored for UK sole traders, landlords, and contractors. From day-to-day bookkeeping to year-end reports, everything is MTD compliant and HMRC ready.

Double-Entry Ledger

Every transaction in Clarth is recorded using double-entry bookkeeping:

• Automatic journal entries — Invoices, expenses, and payments create balanced entries
• Full audit trail — Every change is tracked with timestamps and user info
• Manual adjustments — Create journal entries for corrections or accruals
• Multi-currency — Record transactions in any currency with automatic conversion

How It Works

When you create an invoice for £1,000 + VAT:

Debit:  Trade Debtors (Asset)     £1,200.00
Credit: Sales (Income)            £1,000.00
Credit: VAT Output (Liability)    £200.00

When payment is received:

Debit:  Bank Account (Asset)      £1,200.00
Credit: Trade Debtors (Asset)     £1,200.00

Chart of Accounts

Your chart of accounts is the foundation of your bookkeeping.

Default Categories

Clarth provides pre-built categories for common UK business types:

Assets

• 1000 — Cash at Bank
• 1010 — Petty Cash
• 1100 — Trade Debtors
• 1200 — Prepayments

Liabilities

• 2000 — Trade Creditors
• 2100 — VAT Output
• 2200 — PAYE Liability
• 2300 — NI Liability

Income

• 4000 — Sales
• 4100 — Commission Income
• 4200 — Interest Received

Expenses

• 5000 — Cost of Sales
• 6000 — Rent
• 6100 — Rates
• 6200 — Utilities
• 6300 — Telephone
• 6400 — Office Supplies
• 6500 — Professional Fees
• 6600 — Insurance
• 6700 — Travel
• 6800 — Motor Expenses

Custom Categories

1. Go to Accounting > Chart of Accounts
2. Click Add Category
3. Enter:
   • Code — 4-digit number
   • Name — Category description
   • Type — Asset, Liability, Income, or Expense
   • VAT rate — Default VAT treatment
4. Click Save

Financial Reports

Access real-time financial reports from the Reports dashboard.

Profit & Loss (Income Statement)

Shows your income and expenses over a period:

• Revenue breakdown by category
• Cost of sales
• Gross and net profit
• Comparison to previous periods

To run: Reports > Profit & Loss > Set date range > Generate

Balance Sheet

Shows your financial position at a point in time:

• Current and fixed assets
• Short and long-term liabilities
• Owner's equity
• Retained earnings

To run: Reports > Balance Sheet > Set date > Generate

Cash Flow Statement

Tracks money moving in and out:

• Operating activities
• Investing activities
• Financing activities
• Net cash position

Aged Receivables

Shows outstanding customer invoices:

• Current (not yet due)
• 1-30 days overdue
• 31-60 days overdue
• 61-90 days overdue
• 90+ days overdue

Aged Payables

Shows outstanding supplier bills by age bracket.

Bank Reconciliation

Match your Clarth records against your bank statements.

Automatic Matching

Clarth's AI automatically matches transactions:

1. Go to Banking > Reconciliation
2. Review suggested matches (highlighted in green)
3. Confirm matches with one click
4. Unmatched transactions appear in red for manual review

Manual Matching

1. Select a bank transaction
2. Find the corresponding Clarth transaction
3. Drag and drop to match, or click Match
4. For split transactions, click Split and assign to multiple entries

Reconciliation Rules

Create rules to auto-match recurring transactions:

1. Click Create Rule on any matched transaction
2. Set the pattern:
   • Description contains — e.g., "AMAZON"
   • Amount equals — exact amount match
   • Amount between — range match
3. Select the category to assign
4. Save the rule — future matches happen automatically

VAT Management

For VAT-registered businesses:

VAT Returns

1. Go to Tax > VAT Returns
2. Select the VAT period
3. Review the calculated figures:
   • VAT on sales (Output)
   • VAT on purchases (Input)
   • Net VAT due or reclaimable
4. Submit directly to HMRC via MTD API

VAT Schemes

Clarth supports all UK VAT schemes:

• Standard VAT — Invoice-based
• Cash Accounting — Payment-based
• Flat Rate Scheme — Simplified for small businesses
• Annual Accounting — Spread payments over the year

Year-End Process

When your accounting year ends:

1. Review all transactions — Ensure everything is categorised
2. Run a final bank reconciliation — Match all statements
3. Check accruals and prepayments — Adjust for timing differences
4. Generate year-end reports — P&L, Balance Sheet
5. Export for your accountant — CSV, PDF, or direct accountant access

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