I am setting up as a Sole Trader and am on the steep learning curve regarding book keeping.
I have studied various posts here and think I have answered my question but would be grateful for clarification.
I understand that as a Sole Trader ‘all the money’ is me and Proprietor Drawings Account is the generic term for non business accounts.
I have deposited a sum in my business account as capital. However, I have made some purchases from my personal account that I will eventually offset against tax (desk, computer etc). In terms of Quick file I have uploaded the receipts, tagged them as appropriate expenses and marked them as paid from the Proprietor Drawings. Is this all I need to do?
When it comes to my tax return is there any easy way of reporting these equipment expenses as opposed to regular expenses so I can see them all easily? I think the matter of possibly carrying them over to another tax year given that there are only a couple of months left this year will have to be a question to an accountant!
Thanks…I’m sure this will be the first question of many!
If you selected the appropriate purchase categories when logging the purchases (probably furniture for the desk and office equipment for the computer) then they’ll appear on your balance sheet as assets rather than on your P&L as expenses.
Yes, at this stage all you need to do is mark the purchases as paid from the drawings account, but you may want to balance this out with a “money in” transaction on the drawings account tagged to “capital introduced” if you’re not going to draw enough by the end of the tax year to cancel it out. How you then deal with the assets on your tax return is indeed a matter best discussed with an accountant as it depends on several factors - whether you’re doing your tax return on the regular accrual basis or the cash basis, how much you actually spent, how much (if any) of your income tax personal allowance you still have spare by the year end, how close you are to the threshold for class 4 NI, etc.