Small Business wage on tax forms

[sunny darko]

When you fill in the tax forms do you include the wage you have taken out of the business as part of the business outgoings / costs or does it have to be put in a seperate part of the tax form?


I did my first ever self assesment this year but think I may have done that bit wrong because i didn't see anywhere to write about it seperately so I just put my personal wage as an outgoing cost like any other business cost.

Now I think about it though surely it must be seperate as taxable income or something?

 

[David Griffiths]

You don't say if you are trading as a sole trader or through a company

If as a sole trader, then you do not deduct the money that you take out as an expense - the correct term is drawings, and they are not tax deductible s so you pay tax on the profit before drawings

If it's a company then a director's salary is deductible, and subject to PAYE.

 

[sunny darko]

I'm a sole trader.


If i pay tax on the profit before drawings then I should not include the drawings as a cost when I fill in the tax returns? It must be in a seperate part of the form? meaning I filled the last one in wrong?

 

[Scalloway]

If you are a sole trader then you and the business are for tax purposes one and the same. You do not pay yourself a wage deducting PAYE and NI. Drawings are withdrawals of your own money and not a cost of your business. They appear on the Balance Sheet in the Self Employment pages as part of the capital account.

 

[QuickHomeBuyers]

The amount of people who attempt taxation themselves at the year end without any basic knowdelge of tax is unbelievably worrying.

 

[sunny darko]

Everyone starts somewhere.

This was year 1 of my business. Next year I will have it correct.

 

[Homshaw]

The amount of people who attempt taxation themselves at the year end without any basic knowdelge of tax is unbelievably worrying.

It is worrying but many self-employed people find it difficult to find employment and earn pitiful amounts of money. I have clients who can't read and earn very little money.

I had one client who came to me when they got investigated. They put drawings on the tax return under wages and added it back in underneath.
When I looked they had overstated profits but I can see the dilema.

 

[Williams lester]

Everyone starts somewhere.

This was year 1 of my business. Next year I will have it correct.

Next year you may have it correct...or you may not, if you don't know whether 'wages' should be included, how do you know everything else you have claimed is allowable or whether you can claim for other items which you have not thought of?

Get an accountant to do it for you, we are not as expensive as you would imagine for small businesses...and the cost of getting it wrong can be high in terms of fines etc.

Don't forget you now need to go and resubmit a corrected return for last year as well as this years return.

 

[sunny darko]

I went to an accountant last year and he told me to do it myself.

Not even joking.

 

[MyAccountantOnline]

I went to an accountant last year and he told me to do it myself.

Not even joking.

Hi Sunny

Its a shame your former accountant didnt seem to want to help - we're not all like that

As has been mentioned you will need to correct your tax return to avoid paying the incorrect amount of tax etc.

If you really want to continue completing your own tax returns this might be helpful - http://www.hmrc.gov.uk/sa/your-tax-return.htm

 

[Truemanbrown]

I went to an accountant last year and he told me to do it myself.

Not even joking.

You cannot be serious!!! I hope you didn't pay the accountant anything up-front.

 

[sunny darko]

No i didnt pay him lol, im not insane!

I just asked him to help me do the tax return and was like "oh you don't need me its easy just do it yourself"

 

[Jenni384]

I just asked him to help me do the tax return and was like "oh you don't need me its easy just do it yourself"

There speaks an accountant who is not a businessman!

 

[elaine@cheapaccounting]

There speaks an accountant who is not a businessman!

or woman

 

[Williams lester]

or woman

I'm guessing the accountant was a man...women in business don't usually miss out on an opportunity to upsell..

 

[MyAccountantOnline]

I'm guessing the accountant was a man...women in business don't usually miss out on an opportunity to upsell..

Well I wont disagree

 

[elaine@cheapaccounting]

I'm guessing the accountant was a man...women in business don't usually miss out on an opportunity to upsell..

very true Dave

 

[Jenni384]

I went to an accountant last year and he told me to do it myself.

Not even joking.

That's how I guessed it was a man