Personal money showing in P&L

Hello all,

I’m probably missing something very obvious here. However a little guidance would be great.

My business is new this year so no previous records etc.

I used my personal money to buy stock, get a website etc. This is all fine as I raised a purchase and just tagged it paid from Proprietors account.

However, when viewing the Profit Loss report, it shows in negative figures (my personal money).
Technically the ‘business’ is in profit. It is me personally that is in debt to the business and once I have made my initial payment back I will draw it out.

What am I doing wrong?

What nominal code are you seeing in the P&L? The Proprietors account shouldn’t be showing there, only in the balance sheet.

Thanks for the response. I have confused myself here. However still need help.

It’s 5000, General Purchases. However it still stands that the money used for original stock (general purchases) was put into the business via myself. So this shouldn’t be a minus figure, because the money was technically in the business available to spend?

As a sole trader you and the business are the same thing, so it makes no difference whether purchases are paid from the business bank account or your personal funds. Any “general purchases” count in the profit and loss report regardless of where the funds to pay for them came from.

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General Purchases will show in your business accounts as a purchase of goods/stock

If you want it to show as the business owes you money then you can change how you purchased the item to directors loan which will then show that the business owes you money

Directors loan is for limited companies, the sole trader equivalent is the proprietor drawings account. In both cases the message is the same - all general purchases will show in your profit and loss report because they are expenses that the business has incurred. The fact that the money used to pay for them was effectively “lent” to the business by the proprietor will be recorded on the balance sheet (by showing the drawings account or director loan as a liability) but does not affect P&L.

Ah ok yes makes sense!

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