Hi guys, I was wondering should a sole traders salary be shown on a P&L? Obviously it’s not allowable for a sole trader SA return and would be added back? Is it therefore only preference? I’ve looked for some accounting standards on this and I can’t see anything?
If you are not running paye for sole trader business then salary will be drawings
It would be a transfer to proprietor drawings.
If you think about it, sole traders drawings come from business profits which are sales less expenses, so should not be part of business expenses as that will not show the true profit.
Also the notes for the short self employment supplement of the tax return notes say do not inlcude your own salary in expenses
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Sorry for the bad English above. I’m using a new Android phone and can’t get used to the auto correction.
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