| | CIS opening balances CIS was previously deducted on payment (Sage 50) |
| Description | Do you have outstanding invoices from your old system? Do you want to include them on CIS reports and returns produced by Sage Accounting? Your CIS reports and returns will not be accurate unless you follow this process. - How to enter your opening balances if your previous system did not deduct CIS until paying an invoice
- For example, for an invoice for £100 labour plus VAT, the CIS doesn't deduct until paying the invoice. The outstanding balance does not reflect the CIS deduction and remains £120
- Systems such as Sage 50 use this process
If CIS deductes from your sales and purchase invoices, such as with Quickbooks or Xero, follow the process outlined in our article: Things to considerDo you want to include and report on CIS on outstanding invoices from your previous system? Re-enter these invoices using the CIS functions and ledger accounts in Sage Accounting We may handle the CIS deductions differently to your current system. In Sage Accounting, we deduct the CIS from the total value of the invoice. This happens when you save a sales or purchases invoice. Your previous system may not deduct the CIS until paying an invoice. Don't worry, we still don't include invoices on reports or returns until paid. We may record your CIS in different ledger accounts to the system you have come from. This will affect the way you enter your opening balances.
Read our article How CIS transactions update your ledger accounts
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| Resolution | Before you startAs all outstanding invoices with CIS must be re-entered in Accounting. You'll need to follow this process to enter your opening balances correctly. - Enter opening balances for customers, suppliers, and ledger accounts.
- Reverse your outstanding CIS invoices with a credit note. This removes the value of CIS invoices before re-entering them.
- Allocate the credit note to the opening balance. This stops it showing as a credit on your customer or supplier account.
- Re-enter your outstanding CIS invoices so:
- The CIS deducts correctly from the invoice
- Returns and reports include these CIS invoices. This means you can submit them to HMRC
- The correct ledger accounts update
You may have some CIS invoices paid already from your old system. You may also have some unpaid ones for the same period. This means you'll have a mixture of invoices from both systems for the same reporting period. When this happens: - Follow the instructions outlined here. Do not submit your CIS return from Sage Accounting
- Create the CIS return in Sage Accounting for the invoices entered as opening balances
- Create another CIS return from your old system for the CIS invoices already paid
- Add the two reports together and submit your return directly via Government Gateway
Opening balances for CIS on sales invoicesEnter the opening balance for each customer who is also a contractor. You can enter this as a single overall total. You can also enter multiple outstanding balances for the same customer.  TIP:
- If you have sent CIS and non-CIS invoices to the same contractor, consider entering two opening balances. One balance for the total of non-CIS invoices, and one for the total of CIS invoices. This makes it easier to allocate the credit notes later
- Consider entering each outstanding invoice as a separate opening balance. Do this if there aren’t too many. This makes it easier to allocate credit notes later
In our examples, we have three outstanding invoices with our contractor. The total balance is £360. 
- From Settings, select Business Settings. Go to the Opening Balances section.
- Select Customers.
- Select New Opening Balance.
- Enter the details.
- The Total is the opening balance for your customer.
If you're entering more than one opening balance, repeat for each opening balance. Repeat for each customer. You can adjust the opening balances if you make a mistake. Select the opening balance and make the required changes. Next, make sure you've entered the opening balance for your ledger accounts. This usually comes from the final trial balance used in your old system. For your CIS invoices, you will have an opening balance for: - Trade Debtors
- VAT
- Ledger accounts you used to record the sale on your original invoices
Your Trade Debtors opening balance populates with the customer opening balances already entered. Enter nominal ledger opening balances- From Settings, select Business Settings.
- Select Nominal Ledger from the Opening Balances section.
- Make sure you have opening balances for:
- Sales - Credit
- VAT on Sales - Credit
- Save the opening balance.
In our example, if we only had one customer, our opening balance would look like this: | Ledger Account | Debit | Credit |
|---|
| Trade Debtors | 360 |
| | Sales |
| 300 | | VAT on Sales |
| 60 |
You can adjust the opening balances, if you make a mistake. Open the opening balance and make the required changes to the ledger account or amount. Make sure your outstanding CIS invoices report correctly on CIS reports and returns. You must re-enter them in Sage Accounting. Before you can do this, reverse your outstanding balance for each CIS customer with a credit note. - From Sales, select Quick Entries.
- For the Type, select CR Note.
- Select a CIS customer with an outstanding balance.
Enter the following information: | Date | Enter your start date in Accounting. | | Ledger account | Choose the same ledger account as the original invoice. This is to make sure the balance of the ledger account reduces correctly. | | Amount | Enter the Net outstanding balance. I n our example, this is £360. | | VAT | If you're on the standard VAT scheme, select the VAT rate used on the original invoice. This addsto your VAT return but then reversed when you re-create your CIS invoices. |
Your opening balances reduce by the amount of your outstanding CIS invoices. | Ledger Account | Debit | Credit |
|---|
| Trade Debtors | 360 |
| | Sales |
| 300 | | VAT on Sales |
| 60 |
If you check your trial balance, you'll now see your CIS opening balances reversed. In our example, we only entered opening balances for our single CIS invoice. The trial balance now shows zero.
This is to make sure the credit note isn't outstanding on your customer's account. - Select Contacts then select the required contact.
- Select Manage then select Account Allocation.
- Choose the opening balance for your customer.
- Select the credit note and the opening balance using the check boxes. Select Save.
Now you have reversed everything, you re-enter your CIS invoices. Enter each invoice individually. You need to know the paid status and make sure the CIS reports correctly. In our example, we have three invoices for £100 labour. This will: - Update your Trade Debtors with the invoice values less the CIS withheld
- Update the CIS Tax Liability with the amount of CIS withheld
- Update the CIS Labour with the net value
- From Sales, select Sales Invoices.
- Select the CIS customer with an outstanding balance.
Enter the following information: | Date | Enter your start date in Accounting. This should be the same date that you used for the credit note. | | Ledger account | Choose the ledger account for CIS Labour. This is to make sure that CIS deducts on the invoice and the correct ledger account updates. | | Amount | Enter the amount charged for Labour. In our example, this is £100. | | VAT | If you're on the standard VAT scheme, select the VAT rate used for the original invoice. This reverses the VAT entered on the credit note. |
- If you also charged for materials, enter this on a second line using the CIS Materials ledger account.
Check that the CIS deducts from each invoice.
 - Save the invoice.
Repeat for each CIS invoice. In our example, the ledger accounts update for each invoice as follows: | Ledger Account | Debit | Credit |
|---|
| Trade Debtors | 90 |
| | CIS Tax Withheld | 30 |
| | CIS Labour |
| 100 | | VAT on Sales |
| 20 |
In our example, once we've entered all three invoices, our opening trial balance looks like this: 
Enter opening balances for purchase invoicesEnter an opening balance for each supplier that is also a subcontractor. This is the total balance of all outstanding invoices. You can enter this as a single overall total. You can enter multiple outstanding balances for the same supplier. The total of all opening balances updates your Trade Creditors ledger account. You'll need to enter the total amount outstanding. It's only the total of CIS invoices that we're interested in for the rest of the process. TIP: - If you have received CIS and non-CIS invoices from a subcontractor, consider entering two opening balances. Enter one balance for the total non-CIS invoices, and one for the total of CIS invoices. This makes it easier to allocate the credit notes later
- Consider entering each outstanding invoice as a separate opening balance. Do this if there aren’t too many. This makes it easier to allocate credit notes later
In our example, we have three outstanding invoices from our subcontractor with a total balance of £360. 
Enter a supplier opening balance- From Settings, select Business Settings. Go to the Opening Balances section.
- Select Suppliers.
- Select New Opening Balance.
- Enter the details.
- The total is the opening balance for your supplier.
You can enter more than one opening balance. Repeat for each opening balance and for each supplier. Make sure you've entered the opening balance for your ledger accounts. This is usually taken from the final trial balance used in your old system. For your CIS invoices, you will have an opening balance for: - Trade Creditors
- VAT
- Ledger accounts used to record the labour and materials on your original invoices.
Your Trade Creditors opening balance populates with the opening balances already entered for each supplier (subcontractor). Enter nominal ledger opening balances- From Settings, select Business Settings.
- Select Nominal Ledger from the Opening Balances section.
- Make sure you have opening balances for:
- Sales - Debit
- VAT on Purchases - Debit
- Save the opening balance.
In our example, if we only had one supplier, our opening balance would look like this: | Ledger Account | Debit | Credit |
|---|
| Trade Creditors |
| 360 | | Purchases | 300 |
| | VAT on Purchases | 60 |
|
You can adjust the opening balances if you make a mistake. Open the opening balance and make the required changes to the ledger account or amount. Ensure your outstanding CIS invoices report correctly on CIS reports and returns. You must re-enter them in Sage Accounting. Before you can do this, reverse your outstanding balance for each supplier with outstanding CIS invoices using a credit note. - From Purchases, select Quick Entries.
- For the Type, select CR Note.
- Select a supplier (subcontractor) with an outstanding balance.
Enter the following information and Save. | Date | Enter your start date in Accounting. | | Ledger account | Choose the same ledger accounts as the original invoice. This is to make sure the balance of the ledger account reduces correctly. | | Amount | Enter the Net outstanding balance. In our example, this is £360. | | VAT | If you're on the Standard VAT scheme, select the VAT rate used on the original invoice. This adds to your VAT return but then reversed when you re-create your CIS invoices. |
Your opening balances reduce by the amount of your outstanding CIS invoices. | Ledger Account | Debit | Credit |
|---|
| Trade Creditors |
| 360 | | Purchases | 300 |
| | VAT on Purchases | 60 |
|
If you check your trial balance, you'll now see your CIS opening balances reversed. In our example, we only entered opening balances for our single CIS invoice. The trial balance now shows zero.
This ensures the credit note isn't outstanding on your supplier's (subcontractor) account. - Select Contacts, then select the required contact.
- Select Manage and select Account Allocation.
- Choose the opening balance for the supplier.
- Select the Credit Note and the opening balance using the check boxes. Select Save.
Now that everything has reversed, re-enter your CIS invoices. Enter each invoice individually. You need to know the paid status and make sure the CIS reports correctly. In our example, we have three invoices for £100 labour. This will: - Update your Trade Creditors with the invoice values less the CIS
- Update the CIS Tax Liability with the amount of CIS
- Update the CIS Labour Expense with the Net value
- From Purchases, select Purchases Invoices.
- Select the CIS supplier with an outstanding balance.
Enter the following information: | Date | Enter your start date in Accounting. This should be the same date that you used for the credit note. | | Ledger account | Choose the ledger account for CIS Labour Expense. This is to make sure that CIS deducts on the invoice and the correct ledger account updates. | | Amount | Enter the Net value of your outstanding CIS invoice. In our example, this is £100. | | VAT | If you're on the Standard VAT scheme, select the VAT rate used for the original invoice. This reverses the VAT entered on the credit note. |
- If charged for materials, enter this as a second line. Use the CIS Materials ledger account.
Check that the CIS has deducted from each invoice.
 - Save the invoice.
Repeat for each outstanding CIS invoice. In our example, the ledger accounts update for each invoice as follows: | Ledger Account | Debit | Credit |
|---|
| Trade Creditors |
| 90 | | CIS Tax Liability |
| 30 | | CIS Labour Expense | 100 |
| | VAT on Purchases | 20 |
|
In our example, once we've entered all 3 invoices, our opening trial balance looks like this: 
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