Accounts summary

Could someone more knowledgeable please check if my understanding of accounts summary figures for sole traders year is correct?

1. (Total sales + stock held at year end) - (cost of sales) = Gross Profit

2. Gross Profit - other expenses - motor expenses = Net Profit

3. Net Profit - capital allowance for van = Taxable Profit or Loss

I've made personal deductions for motor and heat/light etc before including them.

Are all above assumptions correct? Any help would be greatly appreciated, as this is my first year doing this, and althought numbers are small, I need to get it right first time!

Thanks,
Gary

Gary Toolan said:

Could someone more knowledgeable please check if my understanding of accounts summary figures for sole traders year is correct?

Click to expand...

Do you not have an accountant? If not then you should really consider engaging one to help you with this.

Gary Toolan said:

Could someone more knowledgeable please check if my understanding of accounts summary figures for sole traders year is correct?

1. (Total sales + stock held at year end) - (cost of sales) = Gross Profit

Click to expand...

Not quite. Total sales - cost of sales = Gross Profit

Opening Stock + Purchases - Closing Stock = Cost of Sales (depending on the industry if you want to be more accurate there are other expenses you might add into cost of sales if they are directly attributable to the cost of the goods you sell)

2. Gross Profit - other expenses - motor expenses = Net Profit

Click to expand...

You can distinguish between other expenses and motor expenses and indeed other expenses as well but this breakdown is a matter of presentation, all other expenses not dealt with in calculating your gross profit come off for your Net Profit.


Like Clubman mentioned though you really should consider hiring an accountant.

Thanks everyone - agree re acct - I just need to get my head around the basics - have arranged to meet with acct, just want to understand the lingo first!
Gary