Question about Drawings/wage?

[beetle27]

Hi,

I am a sole trader with a small handmade card business from home. I'm still very new to all of this and try to keep it as simple as possible. I do my own accounts but just struggling with the wage part. I know as I am the business it is classed as 'Drawings' but I'm unsure where this goes when I do my accounts?

Does it go as part of the outgoings but not included as an expense?
Or does it go as part of the incomings? (I read this somewhere but I am unsure as if for example my incomings for the month are £700 and I pay myself £200, the £200 would be paid out of the £700 but would look as though my incomings were £900?)

Also, when I complete my tax return if there is a box for incomings and one for outgoings is there a separate one to ask what my drawings were?

Hope this makes sense and thanks in advance for any replies. In simple terms please

 

[Bob]

Drawings is merely a deduction from your capital account and doesn't get included on your tax return. In simple terms, you are taxed on the difference between your incomings and tax deductible outgoings after any adjustments that may be needed

 

[beetle27]

Thank you for your reply.

So the drawings that I pay to myself as my 'wage' is not to be included in the incomings or outgoings that I will list on my tax return? Initially I hadn't known and thought it was to go on outgoings to will need to change this. Just want to make sure I get everything right.
Do they not ask or need to know how much I pay myself?

Thanks again

 

[Bob]

Presumably you will merely be completing the 2 boxes on the return for income and expenses. You can ignore your drawings completely

 

[Bob]

you will just complete boxes 9 and 10 on this form. The profit goes in box 21

 

[Newchodge]

Technically you aren't paying yourself anything. You and the business are a single entity and any excess of income over expenses is yours. If you choose to leave some of that excess in the company bank account, rather than transfer it to your own bank account, it is still yours, and you will be taxed on it.

It would be different if you operated through a limited company.

 

[MyAccountantOnline]

....
So the drawings that I pay to myself as my 'wage' is not to be included in the incomings or outgoings that I will list on my tax return? ....

Yes, that's correct.

Do they not ask or need to know how much I pay myself?

They may ask so you must keep an accurate and full record of your drawings.

Sometimes they pick people for an Enquiry and may if they do so want to see how much you've taken out of the business.