So either the bank won’t give you credit card for your Sole Trader account so you’re one of the millions of Sole Traders and just use your personal credit card to pay for your company expenses. Either way it can cause some problems in your online accounting software. In this post as part of our Master Series we’ll be explaining how in a 4 steps you can manage this in your free online accounting software.
Master Series: How Do I Pay Myself Expenses In 4 Steps
This is a question we get asked a lot but just a note before we start. On the payments side of things, as a sole trader there is no difference between you and your business – so the business doesn’t owe you anything since you are the business. The way you are taxee is that at the end of the year, you profit is calculated on what you made minus what you spent, and then you are taxed on that profit. Whether you pay for a business expense out of you business account, or your personal account, it doesn’t actually matter. the business doesn’t owe you money since you are the business.
If, on the other hand, you want to keep your business bank account as separate as possible from a cashflow, when you pay for something from your personal account, you can always move money from your business account to your personal account so that your personal account doesn’t go into debt. Payments from “the business” to “yourself” are just recorded as bank transfers, since that’s all that’s really happening from an accounting point of view.
So I’m going to do a blog post and video about it today. It’s pretty simple but there are just a number of things you need to do. The main thing to remember is you just need to Transfer the money from one account say ‘Pete Personal Visa’ to another ‘Pete Business Account’, these don’t need to be actual physical accounts it’s just a way to manage them in the accounting world.
This Is What You Do
We’ll use the example of me. I’ve a company bank account that’s separate to my personal bank account but I don’t have a company Visa so I’ve used my Visa to pay for 5 invoices that came to €1,000. I’ve withdrawn the €1,000 from my company bank account and now I need to do the transfer from an accounting point of view. So when you look at your books you’ll see that the €1,000 was transferred from company account to personal account.
- Setup personal bank account called ‘Pete Business Bank Account’ and one called ‘Pete Personal Visa’, in the bank accounts section. ‘Pete Personal Visa’ isn’t a real account is just a way to manage it in accounts.
- You pay over the month 5 bills and you mark them as paid, selecting ‘Pete Personal Visa’ as the account where they were paid from, Bullet starts tracking.
- At the end of the month, add up all the bills paid out of ‘Pete Personal Visa’ say €1,000, if you click on the account you’ll see them all.
- You then do a bank transfer from ‘Pete Business Bank Account’ into ‘Pete Personal Visa’, so now they balance.