Drawings

Question asked by Wendy Anderson 8 years ago

As a sole trader, if I make payments from my business account for personal reasons, e.g to pay for a holiday or simply to give myself some spending money, it has been suggested to allocate this to Drawings. If I do this, it is not a legitimate business expense so should be excluded from the profit and loss account. If including it under Drawings, will this automatically exclude it from the P&L. If not, is there a way of doing this in the application.

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3 Replies

Hi again Wendy - when you come to explain any personal bank entries, just pick the drawings account from the Account drop down.

I'd be surprised if there wasn't but if you can't see a Drawings account go to Settings > Accounting > Account codes and check down the bottom of the list. If there is none then create a new account called Drawings (with a Drawings type) and make sure it's available to Purchases and Sales so that you can use it to allocate money out and in.

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8 years ago

Thank you whereabouts is the drop down for Drawings

8 years ago

Hi Wendy

Yes, the Drawings account does what it says on the can, it's shown as you drawing from the capital of your business, ie the money you put in plus any profits you make, being sales less business expenses. So the drawings have nothing to do with calculating accounting or tax profits.

To see this in action view the P&L and Balance sheet reports in Reports > Popular reports, you'll see the Drawings being deducted at the bottom of the Balance sheet.

8 years ago

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