Paying for expenses- sole trader

[Brasstrumpet]

On a couple of occasions I’ve purchased items for my business using my personal account. I have two bank accounts. One is for everything related to my business so all income goes into this account and when I purchase items for work I pay with the card from this account so everything is kept separate from my other account which is for personal bills etc. I then transfer money every month from this account to my personal account to cover my bills. However, on occasion I’ve forgotten my work bank card and have had to use my other card to pay. Meaning I’ve purchased things for my work (tools, consumables etc) using my personal account card. Does this matter? Can I still claim these items on my self assessment for expenses? As I’m a sole trader does this make a difference?
Thanks.

 

[Paul Kelly ICHYB]

You can use all legitimate costs, regardless of how they are paid for.

 

[MyAccountantOnline]

On a couple of occasions I’ve purchased items for my business using my personal account. I have two bank accounts. One is for everything related to my business so all income goes into this account and when I purchase items for work I pay with the card from this account so everything is kept separate from my other account which is for personal bills etc. I then transfer money every month from this account to my personal account to cover my bills. However, on occasion I’ve forgotten my work bank card and have had to use my other card to pay. Meaning I’ve purchased things for my work (tools, consumables etc) using my personal account card. Does this matter? Can I still claim these items on my self assessment for expenses? As I’m a sole trader does this make a difference?
Thanks.

It's better/easier to use one account for all business transactions but you can certainly still include in your accounts/on your tax return business expenses paid in this way.

 

[numbersrule]

On a couple of occasions I’ve purchased items for my business using my personal account. I have two bank accounts. One is for everything related to my business so all income goes into this account and when I purchase items for work I pay with the card from this account so everything is kept separate from my other account which is for personal bills etc. I then transfer money every month from this account to my personal account to cover my bills. However, on occasion I’ve forgotten my work bank card and have had to use my other card to pay. Meaning I’ve purchased things for my work (tools, consumables etc) using my personal account card. Does this matter? Can I still claim these items on my self assessment for expenses? As I’m a sole trader does this make a difference?
Thanks

I agree with the earlier replies plus, would you be willing to divulge how you manage your bookkeeping?
The best way to understand how you should manage the situation you have described is to look at how the payments from your personal account need to be entered in your bookkeeping system.

For example, as you are taking 'Drawings' from the business account to your personal account, the transactions you have paid for via your personal account have the effect of partially off-setting your Drawings. The transactions could be recorded that way which would be

Debit Small Tools Account
Credit Drawings Account

Or

Debit Consumables Account
Credit Drawings Account

Then the small tools and consumables enter your accounts as allowable expenses.

By paying for the business items personally you have paid back some Drawings.

You still need to keep the receipts and digitise them for record purposes.

 

[ecommerce84]

I’ve done this myself and the easiest ‘correction’ is to simply transfer the money from your business account to your personal account to balance the payment.

As a real life example, I made a purchase at Tesco on Thursday for the business of £35.68 and had left my business card in the car, so I popped it back on my personal card and transferred the funds back across as I was walking back to the car.

As the other have said though, even if you don’t do that you can still claim the items purchased as expenses, as a sole trader there is no legal difference between the money, it’s all your money. But I always think that it’s good practice to keep your personal and business money separate, especially if you intend to grow the business.

 

[Ivel]

YOu can still claim it as an expense; no worries there. I do it sometimes, but then transfer the money from my business to the personal account straight away so I don't forget to include the expenses later.

 

[paulears]

In freeagent, I do everything the other way around - EVERYTHING goes through my business account and the items that pop up on the bank account that are not business, get marked as drawings. if it's a business expense, there is a bill created that the bank account debit clears. personal expenditure just needs clearing by marking it a drawings. This works very well and my accountant sees it easily. I have a couple of regular payments that are split between business and private - My office is bursting so a room at my home hosts the servers and 24/7 powered gear connected to the office by the net. I claim 50% of my home electricity which is probably less than I actually use. In freeagent, the bill entered for the business cost is 50% of the total, then the remaining half is marked again as drawings. Any long term transparent system should work.

 

[HFE Signs]

If you have the receipts and it's legitimate then no issues, easier to bank rec. if you keep it all to one bank account though