Profit tax credit question

[dollgerl]

Hi there, I have just started my business of working 21 hours per week, and currently in receipt of Tax credits, housing benefit etc (single parent) I just wondered at the end of this first year would the profit declared be after I taken a minimum wage of say £5.50 for each hour I work every week, or is the profit declared including whats drawn for wages? Also do I draw wages from the drawings secton on the spreadsheet? Confused.com? Lol!

 

[MyAccountantOnline]

Hi there, I have just started my business of working 21 hours per week, and currently in receipt of Tax credits, housing benefit etc (single parent) I just wondered at the end of this first year would the profit declared be after I taken a minimum wage of say £5.50 for each hour I work every week, or is the profit declared including whats drawn for wages? Also do I draw wages from the drawings secton on the spreadsheet? Confused.com? Lol!

Hi - no as a soletrader you are taxed on the profit you make which excludes any drawings (wages) you take out of the business. What you take out personally has no effect on your tax or profit. It confuses many people

You mention a spreadsheet - is that something you've set up yourself?

 

[DeanCo]

For HMRC and benefit purposes your total income from business = profit. And profit = sales less allowable expenses.

 

[dollgerl]

ah thank you, think I am kinda getting it. Well I use simp lified accounts - in excel. But I am looking around for new software at the moment as I do not need anything too complicated, as I won't be paying VAT or anything as its so small the earnings I will make. My current software can sometimes play up, time to update my software I think

 

[MyAccountantOnline]

ah thank you, think I am kinda getting it. Well I use simp lified accounts - in excel. But I am looking around for new software at the moment as I do not need anything too complicated, as I won't be paying VAT or anything as its so small the earnings I will make. My current software can sometimes play up, time to update my software I think

If you just want something really simple and easy to use (and free) VT cashbook is worth a look. Lots of our small and new business clients use this. Here's a link - http://www.vtsoftware.co.uk/cashbook/index.htm

 

[Nelson01]

All that you take out personally has no effect on your tax or profit. You are taxed on the profit you make excluding any wages you take out of it.