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Rich Shaw
September 7, 2021

How to properly record self employed tax contributions?

  • September 7, 2021
  • 1 reply
  • 0 views

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

    1 reply

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    payment after leaving
    September 8, 2021

    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?

    R
    Rich ShawAuthor
    September 8, 2021

    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

    P
    payment after leaving
    September 8, 2021

    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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