I am a sole trader. When I pay myself from the business I use the option to inform QF the money leaving my bank account is going to the QF Proprietor Drawings Account - the name tells me that is the right place. Or that’s what I thought!
However any balance sheet I look at, it shows my drawings as a current asset. Whilst I agree the drawings are part of my profits, they are no longer an asset as they have totally gone from the business, and used on council tax, utilities, food, etc! The amount of the personal drawings is definitely not an asset I/the company can realise any longer - that money has gone.
Clearly either Proprietor Drawings Account was the wrong place to “withdraw” the payments to, or there is another stage I need to do. Can anyone advise please?
There is another step to it. I do this myself but I think an accountant may also do it as part of their services. I could be wrong mind you! I will see if I can find the guide on this
Thanks.
I see the nominal account in your video is actually “Capital Introduced” which seems to be the reverse of what I am needing to do, take money out, not put money in, but I guess one is just the negative version of the other.
In the link @daithespark shared above, there’s also a part relating to nominal 3100 for drawings. This would move it from a bank account to a nominal on your balance sheet.
The full journal and example can be found on the link above, which hopefully helps with your scenario.