So I’ve just started a little side project, and figured I would run it as a sole-trader business, I don’t expect to make much money, and likely an overall loss for the first few years, but I want to get the accounting correct from the start.
So I’ve put £160 into the business, this has been tagged as (3300) Capital Introduced, and I spent some money on a Maccies, and used the wrong card, so I’ve tagged this as (3100) Prop or Partner Drawings.
On the Ballance Sheet this looks accurate to me, as it shows a negative on 3100 as I spent the money, and a postive on 3300 as that was money put in.
Has the maccies purchase been tagged correctly, as I’m not sure if it should be 3100 or 1202
How was this done, was the money deposited into a business account.
In QuickFile this would show as a Money In transaction on the bank tagged as 3300
used the wrong card
Was this your own personal card or your businesses bank card?
If it was the business card you would just enter a Money out transaction and tag it as a bank transfer between the business bank and Proprietor Drawings
What transactions are show on the bank in QuickFile?
Yes, this was a transfer between my personal account and the business account, and has been tagged as 3300 so it seems this one has been done correctly.
It was the business card, and the money went out of the business account, I currenltly have it tagged as 3100 Proprietor or Partner Drawings
I also have some funds that I have transfered to Nominet, that hasn’t been spent on anything yet, as they gave me pro-forma account and required a deposit to be made to cover any purchases, I’ve set this up as a merchant account and tagged this as a transfer between the business current account and Nominet Unallocated Funds merchant account.
1202 - Proprietor Drawings Account - class this account as “you”
Please be aware that the support team are not registered accountant and as such you may wish to seek guidance from your own accountant.
Recommended based on what you have stated.
Money in on the business bank account tagged from 1202 - Proprietor Drawings Account
This is you putting money into the business bank.
Purchase (food) - personal expenses would not be recorded in the business accounts so effectively you have drew the money from the business. Record this as a Money out transaction on the business bank and tag it as a transfer to 1202
The Nominet transaction looks fine
I also just realised that one of the transactions that I tagged as 3100 was a monitor arm I purchased, so retagged that one as 0030 Office Equipment
I notice you have not recorded a purchase invoice?
It also may be worth checking that this can be recorded as an asset as it is low value, It may just need a purchase invoice recorded to an overhead code.
You can use either 3100 (drawings) and 3300 (capital introduced), in which case your entries look fine. Or, you can use 1202 for everything. The difference is that 1202 is a “bank” account in the chart of accounts, so you can just set up money in or out as a transfer to/from the business account to the proprietor’s account. If all you do is either put money in, or take lump sums out, 3100 & 3300 work fine. If, though, you want to pay a business invoice off using your own account, for instance, you could 1202 works better as QF recognises it as a bank account, so you can create a supplier payment, which you can’t do from 3100.
Whichever is easier for you really. You can always change later, or use a mixture. At year-end, you just add together those 3 accounts to get your drawings/capital figure for the accounts.
In terms of the monitor arm, if it’s less than £150, don’t bother using fixed assets, just use an overhead code instead (7000-7999 range).
For what it’s worth, the way I operate is to use the 12xx “bank account” through the year, then create a manual transaction at year end to zero the balance and tag that as “something not on the list” to 3100. So I can make use of the bank account facilities during the year for things like business purchases made with personal funds, but on the year end balance sheet my drawings show as capital rather than assets.
I’ve moved the monitor arm to 7504 Stationary as it’s only £22.50, and I’ve kept the ‘me’ transactions in 3100 for the things I spent personally, and 3300 for the capital I put in to the business.
