Pay myself a wage or other money taken out for personal use

Discussion in 'Accounts & Finance' started by zlib, Sep 30, 2006.

  1. zlib

    zlib UKBF Regular Free Member

    Posts: 18 Likes: 0
    Hi,

    I'm a sole trader, currently only me working for the business.

    What category does taking money out from the business account for personal use fall under?

    Can it be under wages?

    Thanks.
    Posted: Sep 30, 2006 By: zlib Member since: Sep 25, 2006
    #1
  2. bwglaw

    bwglaw UKBF Regular Free Member

    Posts: 4,682 Likes: 230
    Taking money from a business as a sole trader will fall under either 'drawings' or 'expenses'. Drawing money for 'personal use' is likely to be 'drawings'. Wages/salary is not the same as 'drawings' because you are self-employed.

    Jonathan
    Posted: Sep 30, 2006 By: bwglaw Member since: Apr 8, 2005
    #2
  3. gj

    gj UKBF Regular Free Member

    Posts: 308 Likes: 2
    Any money you take out of the business is merely drawings on account of profit (or reapyemnt of money you originally put into the business)

    Either way, it has no tax impact. You are taxed on te profits of the business in the year in which they arsie, irrespective of whether or not you draw them out.

    HTH

    GJ
    Posted: Sep 30, 2006 By: gj Member since: Apr 25, 2004
    #3
  4. zlib

    zlib UKBF Regular Free Member

    Posts: 18 Likes: 0
    Thanks for the info.
    Posted: Sep 30, 2006 By: zlib Member since: Sep 25, 2006
    #4
  5. JohnOvManchester

    JohnOvManchester UKBF Regular Free Member

    Posts: 89 Likes: 0
    Thats your personal survival costs mate... you can not reduce the profit by paying yourself a wage... even if you could you would get PAYE taxed on it anyway.
    Posted: Oct 12, 2006 By: JohnOvManchester Member since: Oct 11, 2006
    #5