Hi Beth, or anyone else, how would i treat pension income? Its not from a customer or supplier; do I just manually tag the bank entry everytime? Really, i wanted to set up a recurring invoice, but it is not an invoice or a purchase order. Any ideas? thanks, Donducébjonos
If by pension income you are referring to the state pension or a private pension that you receive, then this would not be recorded as business income and not recorded in your financial accounts in Quickfile.
When you come to file your tax return, your tax assessment will be calculated broadly into three areas.
The first of these areas will look at your taxable trading profits - which is a figure arrived at after some adjustments have been made.
Then it will add any personal or state pension you receive - because pension income is counted as taxable income.
But your financial accounts - such as in Quickfile, shouldn’t record a personal pension receipt as business income.
Hope this helps!
Ok, thanks for that, but then how do I account for it balancing QF uploads from my bank account with my actual bank account please? Thanks Donducé, also, I don’t have another bank a/c to have pensions put into by dd.
Since you have just one bank account, I suppose you could put it into account code 4900 - Miscellaneous Income.
Or you could make a new account code in the chart of account page, say number 4906 and name it Pension Income.
Then when you want to tag the receipt in the bank screen, click on “Something else not on this list”.
Then under where it says “Post to nominal” - choose 4906 Pension Income.
At the your year end, your accountant will carry out what is known as an Adjustment of Profit Statement and your pension income will be deducted in calculating the profit figure that will be used in calculating your income tax for the year.
It may be worth highlighting that you have included your pension income in your financial accounts - just to make sure that you don’t get taxed on your pension income twice.
I did the tax return for someone who is also receiving state pension and when we logged into HMRC’s self assessment portal, their pension income was already there.
Hope this helps.
If you need any more help, feel free to private message me.
There are several banks that do free banking that you could use for personal or business, or both. I would always recommend using a separate account for business anyway as do most accountants as it makes things much easier.
There are quite a few ways you could do this so probably best speaking to your accountant as they may have their own preference.
What do you do with all your other personal expenses?
Looks like Darren/Lurch have managed to help you out on this one. If you’re still unsure then please don’t hesitate to let me know
Hello, all personal income and expenditure goes into our business a/c. We used to have another a/c somewhere else, but had problems with the bank (on their side). So, accounting for personal HAS to be done through QF as it otherwise wouldn’t balance. I can’t speak to our accountant as I am the accountant!. Much cheaper if I do it all.
Hello Beth, still ongoing with problem, as I have to account for all income expenses through QF. Only two accounts, both business and both with barclays! So, pensions I am accounting for at the moment is as donations (manually tag each time as miscellaneous. Thanks
As others have mentioned above, if it’s pension income it would be personal income so generally not included in your accounts.
This may help, however: Sole Trader Bookkeeping - The Basics
I got that, I meant what do you tag other personal income coming into the account as?
Hi, anything that goes through your bank account that is of a personal nature, should be put through your proprietor’s/owner’s account either as drawings (if the business has paid for something personal) or as “funds introduced” if you have paid money into the bank account (which is effectively what has happened here). Some people run more than one proprietor’s/owner’s account though you can keep it all in one.
That way, none of your personal income or expenditure gets mixed up with the business. If you put it to miscellaneous income, you will just have to strip it out again when you come to do your tax return.
It is definitely preferable to keep separate bank accounts for business and personal, then you don’t have to worry about this, but I appreciate that isn’t always possible.
By the way, I’m assuming you are a sole trader and not a limited company?