The explanation of paying an expense in the help is very clear, but I have a question on a slight variation.

BT sends me a phone bill for say £100. I only use the phone for business 50% of the time so the expense to the business is £50. My question is, who do I put in the Paid To field? BT or myself? My gut feeling is myself since I will have paid BT £100 and the business owes me £50 since I'm actually supplying the phone service to the business. This will also make sense when I reconcile my bank statements as there will be a bank transfer (or maybe cash withdrawal) on my business bank account statement to my personal current bank account (where I pay BT from). Does that sound correct?

Hi John,

The best way to think of it is as follows: You have given the business £50 which it has immediately used to purchase phone services from BT.

Assuming you are self employed, you would enter this as Money Paid Out to BT, paid from the 'Owner's Drawings and Personal Use' account and allocated to the 'Telephone and Internet' expense account.

When you are re-imbursed by the business, record a General Transaction from Cheque Account to Owner's Drawings and Personal Use for £50.

Regards,

I don't know if this helps, but when I was self-employed a few years back and was in the same situation as you. My accountant advised me to pay my private BT bill from my business bank account and allocate 50% to the business (claiming back the VAT) and 50% to my personal drawings. This is acceptable to both the VAT and the tax man.

Thanks Mark that makes sense.

Thanks Peter. This is a neat way of doing it.