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Rich Shaw
Sep 7, 2021 8:01 PM UTC

How to properly record self employed tax contributions?

Hello,

 

I work self employed and have been using Quick Books to record all my business transactions as intended. However I want to know if I'm recording tax contributions correctly.

 

At present when I receive my gross income for any particular job I'm due, I immediately set aside 30% into my allocated tax account. This transaction immediately shows in my Quick Books transactions page as the business account is linked. This is where I need some guidance. In terms of categorising this amount, I've selected it as 'Business' & 'Taxes'. However I'm not sure this is correct as this tax allocation appears to come under as an expense. Is this correct or do I need to record these contributions differently?

 

Many thanks,

 

Rich

    5 replies

    payment after leaving
    Sep 8, 2021 8:26 AM UTC

    Hi Rich Thanks for reaching out to us on the Community pages. We're not accountants so we recommend that any information we provide is qualified by a professional. We assume that when you receive the icome that you're categorising this as business income. When you then transfer 30% of that income iwhat is its intended use, is it to pay your income tax and NI contributions or VAT?

    Rich ShawAuthor
    Sep 8, 2021 8:44 AM UTC

    Thanks John for the swift reply. So the contributions I’m putting aside (30% of my gross income) will be used to pay off my eventual tax bill come self assessment. I’m using QuickBooks to allow me to see the potential forecast for that bill. However I just want to know if I’m recording that 30% correctly as at present it’s being considered as an expense.

     

    Many thanks, Rich

    payment after leaving
    Sep 8, 2021 9:07 AM UTC

    Hi Rich Income tax and NI contributions aren't allowable expenses. If you categorise them as Taxes/other business expenses the amounts will populate in box 45/disallowable expenses, which is correct. We still however recommend that you qualify this information with a profesional.

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