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Coding Advice - Expenses paid by me

I need a little advice on how I code things I have funded on behalf of the business. ie I pay for something on my credit card that is for the business how do I show this in the accounts as funds owing to me. Also on the flip side If I take case from the company against a debt it owes me how do I show this. I am sole trader no vat. Thanks

Hi @TinaBooth

Are you a sole trader, partnership or limited company?

It says hon Sole Trader

Thanks @TinaBooth.

You would record the purchase the same as normal, but mark it as paid from the “Proprietor’s Drawings Account”. This should be treated like your own bank account, so any business expenses paid by you would be paid from here.

This then shows as a liability on your balance sheet, which shows your business owes you the money.

There’s more details here: Sole Trader Bookkeeping - The Basics

And if I withdraw from that where and how do I log it

When you take money out of the business account for personal use you’d tag that as a transfer to the drawings account. If all you’ve taken out is what you already spent then this would return the drawings account balance to zero.

But in most cases you’ll be taking more money out of the business than you put in (otherwise it’s not much of a business!) so by the end of the year your drawings bank account will show a positive balance. You should move that to the drawings nominal under “capital and reserves” to stop it showing as an asset on your balance sheet.

I’m a sole trader and I have instances, like you, where I have paid for something that is business related on my personal credit card. Ultimately I the business owes me this back. Typically I would arrange a bank transfer from the business current to my personal bank account for the amount involved and the business book entries I do would be to credit (reduce) the current account and debit the proprietor or partner drawings account (3100). I don’t bother with the Proprietors drawing account (1202) as this, as Ian Roberts says, is an asset account whereas 3100 is a capital account.

Ultimately that is where the money will end up, 1202 is more of a bridge because QuickFile doesn’t let you log client and supplier payments direct to capital nominals, only to bank accounts. I use 1202 to track money bouncing back and forth between me and the business on a day to day basis and clear the balance down to 3100 at suitable intervals.

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