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M
Mackster
July 11, 2021
Solved

Personal Income

  • July 11, 2021
  • 1 reply
  • 0 views

Ok might seem like a basic couple of simple questions but:

 

1: If I drawn money out for my personal income what category is this classed as?

2: If I buy something for the company like a laptop or printer etc for business use is this expense classed as a 'asset'

 

Thanks in advance

 

 

Best answer by emmam6

Hello Community Users, We just wanted to pop in with some clarity about being a sole trader and how to record paying yourself. You most likely want to record any money you take as drawings, usually that would impact the equity account We'd recommend reaching out to an accountant or HMRC for details on this. We do have a blog here which explains the differences and when a business can take a salary and when the business should be taking owners draw. Any Q's at all feel free to reply to this thread.

1 reply

Certified gold trainer
August 18, 2021

HI 

 

Personal Income

 

As a Director of a Limited Company, you should be aware that the Companies funds are not yours to do with as you wish, but belong to a separate legal entity of which you are a Director. As such you need to comply with the companies acts.  You can pay yourself a Salary - which will be subject to PAYE in the normal way and if this is the case you should operate a PAYE scheme accordingly. Or if the company makes profits or has retained profits it may decide to pay some of the profits out to its shareholders ( which you may well me a shareholder) in which case Dividends will be paid  after the company has computed corporation tax and will in the receipt of the Director be subject to Income tax on your self assessment tax return. 

 

In the case of salaries they would be classified as an expense

In the cast of a dividend they would normally be classified as an other expense, thus being "below the line" and show at the bottom of the profit and loss report. 

 

Laptop/ Printer purchase

 

Yes a "Tangible or Fixed Asset" - which records on the balance sheet and then you ( or your accountant) would account for depreciation over the life of the asset.

 

I hope this helps

 

Martyn A Smith A.F.A, M.I.P.A

Member of the Institute of Financial Accountants

www.themobileaccountant.co.uk

Certified Advanced trainer

www.quickbookstraininguk.co.uk

M
MacksterAuthor
August 21, 2021

Hi Many thanks for you're reply.

Just a query though. If I'm a sole trader and do nor employ anybody would the income taken out be classed as an expense?

 

Thanks in advance

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