I am a sole trader so all of my business payments come out of my personal bank account. I have set up a dedicated Paypal account to handle payments received and payments made for my business (I’m an online shop)
This Paypal account is linked to my personal account. I have just set up the Paypal feed (it’s brilliant!) However the issue I have is that quite often I will buy things when I don’t have a Paypal balance and the money just comes straight out of my current account.
This means the Paypal account on Quickfile is showing a negative balance.
I tried ticking the payments I had made to other companies selecting ‘Bulk Tagging’ and ‘Bank Transfers Between Accounts’ then selecting payment to my Current Account so the payment would show in there rather than the Paypal account but it said there was an error. Am I doing something wrong?
As a Sole Trader business there is no legal separation between you and your business, therefore your sales less your business expenses becomes your trading profit and your trading profit is counted as your personal income.
To answer your questions:
You need to distinguish between expenditure which is for business related expenses and personal expenses, as a Sole Trader, you do not need to complete a Bank Reconciliation, simply enter/tag all sales and expenses for the business and delete any personal items.
Hi Joe
Thank you for your response, I know I need to distinguish between my business expenses and personal expenses. The PayPal account I have linked is only business expenses and payments received for the business.
My question is really that it is showing a negative balance as items were bought with no PayPal balance and the money has come straight from my bank account.
Where as in reality at the moment I actually have a positive balance in my PayPal account as money has come in since.
Does it really matter or is it actually a good way to show me how much I’m spending versus how much I’m earning each month?