Interest

[SmallBizSoftware]

Can someone give advice about how to treat interest on my business bank account. I am a sole trader, first year and using Dosh Cashbook to keep track of receipts & expenses.

My business bank account pays interest monthly and is taxed at standard rate.

How do I show it in the accounts (or don't I?).

Is interest paid a receipt?
Is tax on interest an expense or just a contra entry reducing the receipt?
Can I ignore it until year end and then add it as a separate item on the tax return?

[Jayne]

Hi,

I just keep all my bank statements in order in a clip folder. I don't enter the small amount of tax in my books etc. I just give it to my accountant at the end of my tax year. I use Everite double entry books ruled for VAT, they are really easy to fill in.

I sorted my accountant out from the start of my business, if I then got puzzled with anything I rang them up. It's in there best interest to help you and don't usually charge for advice, it makes it easier for them to do your books if they are filled in correctly.

Best Wishes

Jayne

[Darren@1stAccountancy.biz]

The net interest received through your bank account is shown as income in your profit & loss account.

This is then deducted from your taxable profits as an adjustment in your self assessment return, self employment pages.

The interest is accounted for in the main section of your self assessment return, this being the total interest received for that particular tax year.

The reason being that the amount of interest that is shown must be that which was received during the tax year rather than the financial year of the business....the two can be very different figures.

If you need any more help, drop me an email.

[Alpha]

Ah Jaynes accountant has turned up at last. :D

Good to see you on the forums but an intro would be good :wink:

[Jayne]

Already emailed him :D

jayne

[Darren@1stAccountancy.biz]

Afternoon everyone....thanks for the email Jayne, have now formally introduced myself! :D