Hello, Maybe I don’t need to do anything but I have my account set up as below and see that the drawings are rising year on year and I feel it should be ‘per year’ with some way to draw a line at the end of each financial year. I added my personal account and looked at tagging all the entries but this does not handle cash transfers from petty cash [I get a lot of cash payments] so I have not proceeded and so am wondering how to 'zero my drawings account every year.
Sole Trader Business Account Held:
Tag all personal expenditure paid from the business account, as a transfer into the ‘Proprietor’s Drawings Account’.
You don’t really want to add your personal account as there shouldn’t be anything in there that needs tagging. If you get paid cash it should go into either petty cash, the bank or go down as drawings. For the latter I’d still run it via the petty cash account.
If you want to zero your drawings account you can do a journal entry when you do your year end.
Thanks for the reply, I’ve removed my personal account as it wasn’t helping. I use a petty cash account and draw from that when I buy groceries etc. to save going to the bank and they go into the drawings account as a transfer from petty cash.
How would I do the journal entry to zero the drawings?
I’ve not done anything with journals yet so at this point all I’d be doing is copying info from the help file. Pretty sure it’s not that complicated though.
I am looking to set up a journal to zero my drawings account at the start of each tax year but am not sure which category to use or, in fact, whether this is the right way to go about it. ANyone have an answer?
Check with your accountant if you want to be sure but I believe it should be as simple as adding a new transaction to the drawings “bank account” to zero the balance, tagging it as “something not on the list”, and choosing the drawings related nominal in the 3000 range (3100? I don’t have QuickFile to hand to check).
What you could do is create a journal at year end which would take into account capital introduced too. This could help with your self assessment as the tax man likes to know both capital and drawings figures.
If I have a drawings account that looks like this, for example:
I’ve invested £2000, and taken £3000 in drawings, leaving the account at +£1000.
In your chart of accounts, you should have these two nominals. If not, you can add them using more options at the top of that page, or you could create them yourself.
