Question asked by Adam Elliott 7 years ago
Hi
I personally transferred a small balance into my business account to get things going. Added to Clearbooks under Opening Balances.
I now want to withdraw this balance - what is the neatest way to do this? Do I show the transaction as a loan payable? In which case am I best to delete my initial Opening Balance and enter my original transaction as a Loan Receivable?
Many thanks Adam
Hi Adam - I'm not sure how a new sole trader's list of account codes appears these days but, if you look at yours (Settings>Accounting>Account codes) you should see a couple down the bottom called something like "Owners equity" and "Drawings".
The idea is that anything you inject into the business is put to the first account (eg your payment above) and then anything you draw out of the business is put to the second account (eg when you want to take the money back out).
At the end of the year, if you look at the balance sheet report, you'll see the two accounts set off against each other and any profit added (or loss deducted) from the combined total, to give you a total net sum for what you have invested in the business.
In other words, If you put £100 in at the start, have £5,000 drawings in the year and make a profit of £6,000, the balance sheet report will show a total of your "equity" as £1,100, which will then be carried forward into the next financial year as a starting balance.
Best answerHi Adam - for a new business it is usual to record set up funds as occurring on day 1 of the business as, by definition, there can be no opening balances.
It also makes a difference if you are a Ltd company or say a sole trader, which is it?
Hi Paul - thanks for your message - I'm a sole trader. Look forward to hearing from you. Many thanks, Adam
Hi Adam - I'm not sure how a new sole trader's list of account codes appears these days but, if you look at yours (Settings>Accounting>Account codes) you should see a couple down the bottom called something like "Owners equity" and "Drawings".
The idea is that anything you inject into the business is put to the first account (eg your payment above) and then anything you draw out of the business is put to the second account (eg when you want to take the money back out).
At the end of the year, if you look at the balance sheet report, you'll see the two accounts set off against each other and any profit added (or loss deducted) from the combined total, to give you a total net sum for what you have invested in the business.
In other words, If you put £100 in at the start, have £5,000 drawings in the year and make a profit of £6,000, the balance sheet report will show a total of your "equity" as £1,100, which will then be carried forward into the next financial year as a starting balance.
Best answer
You must 