When a lease is taken out a large amount of bookkeeping needs to take place. Simply signing the lease and taking possession of the leased item is not enough. For the bookkeeper things are only starting.

When it comes to your year end, the auditor or accountant will start asking for stuff. One of the biggest problems you and him have is getting together the information for leases taken out during the year.

He needs to know what you bought, when you bought it, did you trade in something against it , who did you lease it form and so on. So with this in mind, here is a checklist to ensure you have all the information he needs and that will make him happy and you look very organised and in control.

1. Get and keep a copy of the signed lease. This gives all the financial details, start and end dates of lease and any other up front payments.

2. Set up a lease file for each lease. In the file record
   a. Your own reference for the lease e.g Lease 01, Lease 02 etc.
   b. Which leasing company the lease is with
   c. The lease agreement number
   d. A phone number for the leasing company if you have any queries
   e. What is being leased
   f. If another item was traded in for the item being leased, what that item is
   g. If you are adding the balance of a previous lease to this lease, the amount of the old lease being added.
   h. A copy of the invoice for the goods being leased
   (the invoice is always made out to the leasing company but you need a copy)
   i. How long is the lease for
   j. The start date of the lease
   k. The end date of the lease
   l. Calculate the amount of interest to be paid by calculating the amount in total that your business will pay less the actual cost of the item being leased, this is then the lease interest amount.
   m. Get a VAT invoice from the lease company. This will show you the date each payment and the date on which you can claim the VAT back on.
   (Photocopy this 12 times, one for each month and use this as your purchase invoice for each relevant month)
   n. How many payments where made up front if any

3. Place all the details in a leasing file. Use a long cut manilla folder and put all the paperwork in the folder. Place punch holes in the paper and the folder and using treasury tags, secure the paperwork in the file.

4. In your accounts system set up a supplier for this lease. Do not mix this lease with other leases. One supplier account per lease.

5. Place the lease file in suitable filing system e.g. filing cabinet

Now you have the details for your lease gathered together with all the information at hand enabling you to answer any question about the lease.

You can get a leasing check list printout for your files here.
(You need adobe reader 8.0 or higher to view the file)

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(c) Nilsson Denver Ltd 2008