Hi
1.My girlfriend is a sole trader and she pays herself weekly salary(from business bank account which is connected with Quickfile to personal bank account) . I understand she has to create Proprietors Drawings Account but when we tag it this way the Profit Before Tax and Suspense Account(9998) are going up in reports. Is it correct. How to manage it correctly.
- She pays me back every month part of money I gave her for her business. How manage such situation.
How and where create Proprietors Drawings Accounts (I think I should do this)
3100 Proprietor or Partner Drawings
Her own salary is not really a salary and not tax allowable expense, it is just drawing. As sole trader what ever profits are there its taxable regardless its been taken out or not
On repaying you, a liability (loan a/c) should have been established when money came to business and now repayment time , money out should be tagged to that same loan a/c. again not a tax allowable thing
Hi @awariat
When you open your QuickFile account, we create a Proprietor’s Drawings Account which can be used to take money out of the business. Legally, there’s no separation between the proprietor and the business so you’re not able to take a salary as such, but rather drawings.
When you take drawings, for convenience purposes, you can tag them as a bank transfer from the bank you’re taking the money from (e.g. Current Account) and as a transfer into the Drawings Account. This shouldn’t show on the profit and loss but will show on the balance sheet.
This enables your accountant to pick up the relevant figures correctly when it comes to self assessment.
@FaradayKeynes has beat me to answering this part :). But to sum up what I was going to say - check with your accountant to ensure it’s recorded correctly (I’m not one, but @FaradayKeynes is)
Hi all.
thank you
Above there is what I did. But it makes Profit before tax (and suspense account as well)more 150 every time I tag it(150).
Is it correct to use both:
Salary or other drawings or Bank transfer between accounts?
Regards
Either way is correct - they both have the same effect.
In regards to the suspense account - this is more up of untagged transactions (mainly, although it can be other things too such as opening balances). What I would suggest doing is drilling down into the suspense account (click the magnify glass icon on the suspense account line) and take a look. Also ensure that all your transactions are tagged and opening balances accounted for, and that should clear it.
Why is suspense in equation in first place?
It should be simple bank money out tagged to drawings and loan a/c and that is it.
The suspense account is the “other side” of any untagged bank transactions. If you have £150 “money out” untagged on your bank account then the matching entry would be a debit of £150 on the suspense account (money out is a “credit” on the bank in accounting terms). When you tag the bank transaction as a transfer to drawings it removes the £150 debit from the suspense account and puts it on the proprietor drawings bank account instead.
The removal of this £150 debit is what makes the suspense account appear to “go up” - the suspense balance in green is the total of untagged “money in” minus untagged “money out” across all your bank accounts, it would be red if there was more out than in untagged - and because the debit has moved from a P&L code (suspense) to a balance sheet code (drawings) it correctly increases your net profit by the same amount.
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Thank you all.
It looks like profit is bigger than now but tagging makes it more correct:)
I understood this problem but:
“She pays me back every month part of money I gave her for her business. How manage such situation”
Could you tell me what should I do? It is not easier to make like before (Proprietors Drawings) but with different description?
how did you record when money was given to her?
Loans(2300) but I don’t know is it correct. If it is, how to manage repayment?. On Bank account it is payment to my account(my name)
At present balance on 2300 loan a/c should be credit in balance sheet, once you record payment from QF bank a/c tag it to loan a/c 2300, it should reduce the loan a/c balance due
Please again all procedures
To create
- go to banking>all bank accounts> new loan account(what data?)
To tag repayment
go to business account and tag in Transfer between accounts?
Suppose your main business bank account is Natwest
When you gave say ÂŁ1000 to business as loan, you would go to NatWest in QF and add transaction money IN for ÂŁ1000 and tag it to loan a/c 2300
and now say repayment amount is ÂŁ50, you would again go to natwest a/c in QF, create a transaction of ÂŁ50 (money out) and tag it to loan a/c 2300
Your net balance for loan a/c 2300 should be (1000-50) 950
Thought that I would reopen this thread as it is relevant to my situation. I started my business in 2014 and borrowed ÂŁ1000 from my wife. In 2015 I borrowed another ÂŁ2000 from my wife making an outstanding debt of ÂŁ3000. I repaid both of these loans as a lump sum in March 2017.
I only have my data in QuickFile back to the beginning of Apr 2016 so no record of an outstanding loan is recorded. However I now need to tag the loan repayment of ÂŁ3000 to account for it correctly.
Should I create a new bank account for the loan with a starting balance as of 1 Apr 2016 of ÂŁ3000 and then tag the repayment as a bank transfer into that account to clear the debt?
