I am a sole trader and want to use the HMRC simplified accounting method for flat rate use of home and vehicle millage. From what I understand I have to use a Proprietor Drawings Account, however I don’t see one in the list of accounts I have setup. I would like to know if this is an account I have to manually set up myself and if so once set up how would I process these flat rate expenses? Would this account correctly affect my expenses if I tagged an invoice for it? Would I just create a supplier called “Flat Rate Expenses” or similar to create invoices with for the flat rate expenses.
I need some help with tis as i’m finding it rather confusing. Thanks.
Thanks for that it now shows up, however I am still unsure how to use it to account for the HMRC simplified flat rate use of home and vehicle millage expenses. Would I just create a supplier called, “Flat Rate Expenses” or similar and make an invoice to them and then tag it from the Proprietor Drawings Account?
Would this correctly register the flat rate expense in question as an expense in QF?
Does the balance of this Proprietor Drawings Account mean anything and how does it effect the accounting reports?
I also understand that if I make drawings from my business account to sort of pay myself some money that I can do it then I can show it as a transfer to this account. Again will this have any effect on the transfer showing correctly as taxable income?
Yeah I saw that before I posted this question, however I didn’t fully understand it and was hoping someone would clarify the exact procedure for doing it.
This applies to me also (I’m new to Quickfile), but I run a Ltd company where personal funds often pay for business expenses, I then reclaim. All that I’ve read in the support materials on this site mention Proprietor Drawings Account yet this doesn’t appear to exist nor allow me to create one.
How do I, as a Ltd company, enter business expense payments and then how do I enter these as having been repaid from the company to my personal account?
If you’re operating as a limited company then you don’t have a drawings account, but the “director’s loan” plays the equivalent role. When you pay for a business purchase with your own funds you mark it as paid from the Director’s Loan account, and when the company pays you back you treat it as a bank transfer from the current account (or wherever) to the director’s loan.
But it’s not a directors loan as such, as a Directors Loan works the other way around - the business lending money to the person, for the person to pay that back to the company. Expenses are the opposite of that.
Are you sure? It feels very wrong to do that. Seems an oversight of QuickFile not to have an expenses mechanism.
It is correct - the directors loan account works both ways.
Consider this - if you buy something for the company as a business expense using your personal account/money, you (the director) are loaning the company the money to buy that item, therefore it’s paid from the directors loan account. This means the company owes the director money.
When the company pays the director back (from petty cash, bank transfer etc), a transfer is made in quickfile from the relevant account to credit the directors loan account, cancelling out the loan to the company the director had made.
As long as the director’s loan is 0 or in debit, you’re OK as it means the company owes you money.
If the director’s loan is in credit, it means the company has loaned the director money, and if it’s not paid back within a certain time, there are tax liabilities for it.
If you have multiple directors, you should have a directors loan for each of them to track how much the business owes/is owed by each.
Thanks. I guess that makes sense. All my previously terminology with my accountants over the years has meant a Directors Loan, is a loan to the director from the company. Maybe this isn’t true across the board then, leading to my confusion.
But back to what you said, would I then mark an expense that I’ve paid for with my own money as a ‘money out’ (debit) type? Meaning it’s in the red and the business owes me the money. If so, how would I go about recording that transaction in the Current Account as an expenses (purchase) for XYZ?
You’d record a purchase invoice in Quickfile, and mark it as paid from the directors loan account. (Or just a money out amount in the directors loan account directly, and tagged against the relevant nominal code if you don’t want a purchase invoice).
This will put the directors loan account in debit (red).
When you make the physical payment to yourself from the company bank account, you’d enter a money out amount in the current account, and tag it as a transfer from the current account to the directors loan account.