I have used the Proprietor Drawings a/c a few of times as I have paid for items in cash for the business from my own personal funds.
I have created an invoice and tagged it to Proprietor Drawing a/c. I have then carried out a transfer from my bank account to the Proprietor Drawings a/c, but I did not physically transfer the money from my business bank account to my personal account and now my business a/c balance is not correct.
When I do this sort of transaction should I have actually moved the money out of my business bank a/c to show that the business has physically reimbursed me and then tagged that transaction to the Proprietor Drawing a/c.
2.If so can I transfer (say at the end of a month) to myself the total amount of the balance in the Proprietor Drawing a/c. so that it zeros and can I tag it as a lump sum. Or would it be better to transfer individual amounts.
Hi,
When paying something for the business from your private money (private bank account, private cash, private credit card and so on) create an invoice and tag it as paid from the Drawings account. There is not transaction between your business bank account and the drawings account involved. Only enter a transfer from your business bank account or business cash account (and so on) to your drawings account when you physically paid back the money your business owns you. That would be a transfer between accounts (business bank account to the drawings account.
If you have more than one payment made from your private account to pay for business expenses, you can make a lump sum weekly or monthly. But I wouldn’t do more than a month in one transaction. And if you have quite a lot of this kind of payments made it is maybe better to make a weekly transfer, just to keep track.