Hi
I’ve introduced capital into the proprietors drawings account and also recorded two purchases which I made from my personal bank account, these transactions show as money out.
I have listed two NIC payments to HMRC and these transactions show as money in.
My thoughts are that it should be the other way around as it looks as if I’ve taken money out of the account when actually I’ve introduced money into the account.
Have you done Journals or tagging it?
Hi I’ve tagged each one as I’m unfamiliar with journals
If you introduced capital then tag it to 3300 Capital Introduced for Sole Traders , Credit entry of purchases would go to same account. NIC payments would go into drawings 3100 Proprietor or Partner Drawings
As I’m tagging from my bank statement would I tag the capital introduce via something not on the list and then capital input with 3300 in the description?
Sorry I may not have made myself clear. I do not have a 3300 Capital introduced for sole traders on the list do I have to create one? I originally created a capital introduced but it was numbered 3000 which I’ve now deleted.
If you go to Reports > Chart of Accounts and the see Capital and Reserves (3000 -
3999) you should see capital account
These are the only three options available in Capital and Reserves
3100 Proprietor or Partner Drawings
3101 Retained Profit & Undistributed Reserves
3200 Profit and Loss Account
Which is why I wondered if I needed to create 3300 in this section.
It should be there if not create one
Thank you for your support
OK, to add to the confusion, how does the 1202 Proprietors Drawings Account fit into all this? I’m guessing the difference between Assets & Liabilities & Capital and Reserves?
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Let me offer some advice from my experience as a sole trader. I studied financial accounting to just below degree standard and now use QF for my business. The thing to remember is only when you are taking money out of the business for personal use is it classed as drawings. Any such withdrawals must show as a deduction from profit in the balance sheet.
The easiest thing to do is just use nominal 3100 (Proprietor or partner drawings) for capital introduced and withdrawals as drawings. 3100 is a capital account so a Credit entry will increase it and a Debit entry will reduce it. As Julie says, 3300 Capital Introduced for Sole Traders does not actually exist. Hope this helps
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