Personal Drwings and Transfers - Sole Trader

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marcin

Registered User
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Hi,

I'm a long time reader, first time writer:)
I know all the rules, I did a bit of search and couldn't find the answer.

So my question is: How legaly should I put in my books my personal Draiwngs and Presonal Transfers In to my bank account?

Should I just put: Personal Drawing in case of drawing, and Personal Investment in case of Transfers in to my account? Or there are some SPECIAL accounting names for that?

Thanks so much for your answers.
 
As a Sole Trader, I have a business account and a business credit card account separate to those I use personally. I keep the 2 sets strictly separate and transfer my "wages" from the business to the personal.

It makes it easier for my accountant and helps me keep budget.

Internet banking makes the transfers easy.
 
I'm doing the same, I have separate accounts etc.
My question was how do you state that in your books/program?
 
The accountant gets all the statements etc. for the business and works from them. All transactions in the business accounts are strictly business and you can clearly see the wage transfers.

At the end of the year I talk to the accountant about any other issues such as transport costs, heat, electricity etc. At that point we reconcile any spending that may be business and/or personal.
 
Thanks for all your answers, I do my accounts myself That's why I'm asking.

My question is: How legaly should I put in my books my personal Draiwngs and Presonal Transfers In to my bank account?

Perfect anser to my question would be:

For personal drawing i put in the system: PRIVATE DRAWING
For personal Transfer In to bank account I put in the system: PRIVATE INVESTEMT
 
I just put 'payment to myself', and my accountant has no issues with that and knows exactly what it is - its always a transfer going from business a/c to my personal a/c.
 
Whether you take money as drawings by cash or by cheque or by transfer to your personal bank account they are all DRAWINGS. At the end of the year the drawings shows in the Capital Account of the business as a minus. Drawings are not deducted from profits like other expenses such as motor or phone.

Remember your tax position will be based on the adjusted profit for the business not what you have taken out in drawings.
 
Like Graham says, any money you take out of the business are Drawings and this reduces the Capital a/c (or Owner's Equity a/c etc).
If you add extra money of your own into the business, that would increase the Capital a/c.

I do my own accounts too, using QuickBooks. If I put money into the business, I use the Capital a/c. For Drawings I set up 2 accounts: Drawings (Personal) and Drawings (Tax) (for the big payment to the tax man each November!) but that's purely for my own record.

At the end of the day, as a sole trader, you are not legally required to use any set format / account names within your accounts as far as I know. You just need to keep full records of everything, and have figures to hand to do your tax return each year. Once you know how much in total you took out of the business in the year (Drawings) and how much Capital you added in, that's all you need to fill out in your tax return.

Of course, if you ever intend getting an accountant, it helps if you keep a fairly standard set of a/cs and it also makes doing your tax return a lot easier as you can just copy the necessary figures directly from your Profit & Loss statement and Balance Sheet.
 
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