Hi Guys,
Please can you advise how an payment from my insurance company due to a claim should be tagged on the bank feed. Are there any specific nominal codes?
Thanks in advance
It’s not a business expense. And it’s not an allowable business expense. So it either goes to directors loan account or proprietor drawings
How would an insurance claim payout be a business expense anyway?
Its not an outgoing payment so i am confused at your suggeation.
I’m confused with your reply.
You ask how its treated and I told you. I also said it wasn’t a business expense as an explanation of why it goes where it does. So what’s not to understand?
Proprietors drawings account is not exclusive to money going out. Ita a nominal used to record money which is not business related.
If your unsure of these things perhaps seek an accountant…
I think the confusion is because you used the word “expense” when the question is about money coming in to the business (from the insurance company) rather than money going out.
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Where the amounts belong in your books depends on exactly what the payout was for? If it’s to reimburse you for costs you have already incurred then the payout is effectively a credit for those costs - they cease to be “expenses” of your business because the insurer has paid for them instead of you.
If you’ve already recorded these costs as purchases then I’d handle it by crediting those purchases to a spare bank account (possibly drawings/director loan if you don’t want to create a whole new bank account specially) and then tagging the insurance payout as a transfer from the same account to balance things out.
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The word expense was used in the context of it not being an expense though so its still confusing
You’re the one who brought up the word expense.
I’m still confused though, if for instance I have business insurance paid for by the business and the business makes a claim on the business insurance and it’s paid to the business I’m confused as to how any part of that could be classed as non-business anyway.
There is a nominal code 4903 for insurance claims, so to resolve the initial problem it can be tagged to there.
As @ian_roberts said in his reply you will need to (work with your accountant to) reconcile whether this income covers any expenditure showing in the accounts, depending on what type of claim it is. If it is tagged to a separate nominal for now this makes it easy to look at and acts as a reminder.
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I really don’t want to get in to an argument about this. But a little context goes a long way.
Your first post never once mentioned it was related to business insurance, your question simply said an insurance payout has gone in to the account. Point 1.
Point 2, again context. I said it WASNT a business expense. You keep referring to the word as if I’d said it was. I don’t know how much plainer my sentance could have been.
But now you have decided to add more explanation to your question, whether it is or isn’t, will depend on what the claim was for and what the payment was related to.
In short, speak to an accountant.
I didn’t ask the original question, I was just asking about the insurance not being a business expense part. Never mind though.
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@Paul_Courtier I do think your response is a little rude. The original post asked about a payout from an insurance company. True, it didn’t mention specifically it was business insurance but you didn’t ask for clarification on that point.
You then responded as though it was money paid out of the business, rather than into, and assumed it was personal.
Hence, the op was understandably confused and asked for clarification.
Money received from a claim on a business insurance policy will be business-related, and as another post pointed out there is a specific nominal for it.
It was a perfectly legitimate question and there was no need to be discourteous in your response. We are all here to help each other out.
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