Forum Message

Owners Capital

Hi there. Can you help?

I have injected money in to my business, for buying tools and equipment etc. How do I go about paying myself back without it being drawings?


Posted by Mark Squires on Dec 20, 2012 12:03 PM GMT

Hi Mark,

I think you should treat that as drawings from the business - I don't see any benefit to using another approach. If you are self-employed create a General Transaction from the Cheque Account to the Owners Drawings and Personal Use account.

Regards


Posted by Mark McLaren (Solar Accounts) on Dec 20, 2012 12:50 PM GMT

I do this as well, and count it as transactions to or from 'Owners capital'. I then charge interest on the capital balance in the account. (I declare the interest in the appropriate part of the Self Assessment service when I complete my return).

As I understand, I can transfer funds from 'Owner's Capital' to my personal accounts without any tax liability on my business or personal account.

Am I doing something wrong? My accountant seemed happy with this when I checked last year (I'm doing all my own accounts this year).


Posted by Dafydd Owen on Jan 3, 2013 3:55 PM GMT

Hi Dafydd,

I assume you are self-employed (ie. the business is not a limited company). In that case it is fine to transfer money in and out of your business without incurring tax liability.

However, my understanding is that for tax purposes your business cannot charge you interest on money it 'lends' you. But I'm not an expert on this - please check with your local tax office.

Regards,


Posted by Mark McLaren (Solar Accounts) on Jan 3, 2013 5:20 PM GMT