Hi Forum,
I’m a consultant and a sole trader. Should I be including my personal daily labour as a purchase (as an expense)?
If I charge my clients £250 a day, is that the amount I should include as a purchase, or should there be a profit element, so that the amount charged as a purchase is always less that my charged, daily rate? If so, how do I work out what this profit element is?
Many thanks for any advice.
I am not an accountant so this is only for general guidance and I’d recommend also seeking the opinion of a professional accountant.
As a sole trader you can’t normally expense your own time. What you receive from your client for the work, less any general expenses (e.g. materials, items for resale etc) will be considered as your profit. As a sole trader you and your business are one and the same.
On the other hand if you hire employees or sub-contractors to assist you with the work, these costs can be expensed.
I hope that helps!
That’s very helpful, and as I was presuming it had to be.
Many thanks for your time.