I may just be getting a little bit confused, but just wanted to clarify something. On QF, the drawings do not affect my profit and loss in any way, shape or form - I’ve always taken it on the basis of me and the business being the same ‘entity’ from a legal point of view.
However, on my Self Assessment return, HMRC adds my drawings onto my profit.
Is that correct, or have I done something wrong on QF? I just want to stay on the right side of the tax man (obviously!!)
That’s right the drawings won’t affect your P&L as they are balance sheet movements.
I’m not sure about the Self Assessment supplementary return for self employed individuals, I don’t know why drawings would need to be added on again? Typically you would work entirely from the P&L for the SA return, total of all income (4000-4999) minus expenditure (5000-9999).
Just make sure your suspense is zero before taking your P&L bottom line through to your return.
Maybe an accountant would be able to comment further on this. What to do the supplementary notes say?
As a sole trader once you make profit its taxable weather you withdraw it or not in shape of drawings, hence drawings dont come under P&L. Only things you would need to add back in SA return is private use of items in P&L list
I can’t recall the full self assessment (no access to it at the moment), but there’s two boxes on there:
I type the figures in as per QuickFile reports, and HMRC seems to add those two boxes together
Drawings are balance sheet item they dont get added back in SA return at all, only private use of items
I’ll have another look tonight when I get access to it, and if possible post a screenshot (of sorts)
Ok, so managed to nab these screenshots.
After I’ve entered all the expenses, it shows my calculated profit (which matches QF)
Then, on the next page, it shows this:
@Glenn - for reference, the notes says the filled in box should be:
Your own wages, salaries and other costs (including drawings)
Include your own wages and drawings, pension payments or NIC contributions. Also payments for non-business work.
If I continue through it to this page, A = My drawings, B = Profit + Drawings.
It’s probably just me missing something, but would like clarification!
I would say that the disallowable expenses applies only if you’ve expensed any of those items to begin with. If you’ve been transferring to the proprietor drawings account then this wouldn’t be the case. For example Class 2 NIC is not an allowable expense so this section would allow you to add back those items if you’ve previously expensed them.
Disclaimer: I’m not an accountant, so would recommend getting a 2nd or 3rd opinion.
I will take salary as example, if you are not running payroll and your salary is showing as expense in your P&L then that needs to be added back BUT if its debited to drawings (balance sheet) then no need to add back
So, as my drawings aren’t showing on my P&L (as they’re under 3100 as per Joe’s post:
http://community.quickfile.co.uk/t/sole-trader-drawings/569/2?u=parker1090
but am running payroll (costs declared elsewhere), I should just leave that particular box blank?
being a sole tarder if you dont have any other employees then you dont really need to run payroll. If you have other employees you still dont have to put through your wages via payroll, if you do then its business expense and your SA return will have employment section as well
My SA return has employment from previous job anyway that ended last January.
My wages/drawings have never gone through payroll (was actually advised by HMRC that it would be illegal to do so being a sole trader).
All I have done is taken £x per month/per week - whenever, from the business bank a/c to my personal bank a/c via bank transfer, and tagged it on QF as a transfer to the drawings account.
At the end of the year, I journaled it based it on Joe’s post I linked to above:
Cr 1202
Dr 3100
So, now I have on my balance sheet a minus number for 3100 under capital and reserves, equal to the amount I Dr above. I’m not 100% sure I’ve done that correctly - so please feel free to correct me on that too.
But I’m still not sure if I should be leaving the box “A” (above) blank, or if I should put the balance of 3100 in there (e.g. my drawings for that year), even though that affects my taxable profit?
Sorry if this is something really simple and I’m just missing the point, but as I said - if it’s one person I want to keep happy, it’s Mr Tax Man! 
3100 is not P&L head hence no add back required
Hi Matthew, I think you are spot on in what you say in your last post. Your physical payment out required a Cr entry on bank account (to reduce) and a Dr entry on 1202. As I said in a recent post, sole trader drawings (like NI contributions, wages and private spends) are deducted from your profit line. Profits are capital as long as they are retained in the business. Nominal 3100 is a capital account and so outgoings (eg your wages/drawings) must show as debit entries so you have done right to journal balances from 1202 to 3100. A debit balance on 3100 will show in bold red type (and is effectively a negative amount) on the balance sheet. Robin
Thanks @gardenman_2803 for confirming!
So it’s safe to exclude it from the SA return, or at least in the box highlighted above?