Hi, my partner is self employed, a dj.
Long story short, his accounts have changed this year due to an inheritance from his mums death.
I’ve just started using q.f and didn’t realise how good it was so never realised I could open a full range of accts.
My partner has been ‘lending’ his business money from the inheritance, and using earnings to pay it back into the inheritance ac.
He has bought LOADS of new gear ( which will be AIA’d)
I didn’t set up an owners equity as I didn’t know it was available so just used a bank ac.
And figured sorting that out at the end.
At the end of the year…I managed to balls it all up by getting stressed about getting end of year to the tax peeps and finalised the accounts.
Then on top of that, the tax credits want to review the accounts and I haven’t yet worked out what I’ve done.
I could really do with some help.
His p&l is showing as 695.60 net profit
When this should have been paid back to the inheritance as a loan?
Capital exp is showing as 9374
Bank (8679)
Net profit 695
I believe he made a 8679 loss? As that’s what he’s put in and not got back, (investment - earnings) but then I doubt myself and think something else.
And then, how do I put it right on here?
I could really do with some help before the 70+ panic attacks I’m having each day, along with the 3-4 hours sleep a night totally finishes me off!
Persume you are sole trader
Any money owner introduce to business would have effect of
Dr Bank
Cr Capital a/c
Any drawings
Dr Drawings
Cr Bank
Any purchases
Dr Purchases
Cr bank
Best is work out what adjustment needs done and journalise it instead of correcting individual entries
So then, would I be right in thinking I would Dr the bank / owners capital, as a contra? and what date would I put on the journal?
Any money made should have been paid back to his personal inheritance so that would leave everything at a £0 except the capital account right.
( I perhaps should say here, and hope not to be judged, but I do have a health issue that “wipes” information from my brain when I get stressed - and at other times but mainly when Im stressed. It makes me terribly confused and the stress of making a potential mistake doesnt help especially as Ive been out of this for 7-8 years now)
And also, On this program, how do I edit these journals and what affect will this have on the end of year next year as I have already completed year end and do not know how to reverse this process.
we run with the standard april to april tax year.
Ive managed to undo the year end now but have one last problem.
I think I have one last problem…
I transferred the asset costs (which were showing as cr in bank) to the proprietor account Ive now set up.
Then I transferred the balancing net profit to the proprietors account making the bank £0 (as it doesnt exist in real lif yet…) and reflecting what has been put in by owner…but, Im still showing retained profits in the balance sheet?
This doesnt seem right as I expected the proprietors account cr to absorb the profit…
Being a sole trader important thing is P&L only unless you have fixed assets to claim all kind of allowances. Any profit you make is taxable regardless its been withdrawn or not.
Make sure your P&L entries are correct, if you dont have any assets or liabilities and withdrawn all profit then there should not be any thing in balance sheet
My partners mum died so he has inherited and invested a lot into the business in the last half of the year.
My thoughts are that he will claim AIA on the investments and roll over the loss.
The accounts are showing
Assets of 9K
Proprieters drawings of 8.5k
and 0.5k retained.
(roughly)
But there is nothing retained as I paid back the prop ac which was reading (9k) with the retained profits.
I just cant get my head round it TBH
Not all assets get AIA, what kind of assets are we talking about?
Computers, mixing desks, etc big stuff and mainly electronic
.
Not cars or buildings .
Any thing for reselling purpose wont get AIA
None of this is for resale. Its all essentially “tools”
My question is still, the
P & L showed Retained Net profit of £500
The assets show £9000
Drawings ( £8500)
I cant understand how this is working as when I fill in the tax returns, I will put £500 net profit but this isnt retained as its been used to pay back some of the capital investment. So I expected there to be 0 retained profit?
(I think I must have lost some information up there - would you believe I actually have an NVQ4 with the AAT)
How would a sole trader ever recoup the money invested if the earnings always show as retained profits? ie the loan is never shown as a repayment and the net profit is always taxed?
Paying for capital items wont reduce net profit and profit as per accounts would be different from tax computations, if you are not 100% on DIY best is get paid professional help from your choice of accountant