Sole Trader Beginner, Couple of Questions

jasmin10

This is oly the 3rd week of my business up and running. If I want to take some money back out of the business for some expenses which I have paid out for. Which column or how do I show it in my account book? I understand that sole traders can take money out freely as long as it is accounted for and not leaving the business in deficit.

Also, Business Mileage. Is it sufficient just to keep a few petrol receipts or do I need a full blown continuous mileage chart. or how about just writing down date, where I been and the mileage for that journey.

jasmin10

I would really appreciate any advice.

missmoon

I'm not sure how your account book is laid out.

The bookkeeping entries are:
Credit cash account (to reduce balance)
Debit the relevant expense accounts.

Or, if you are not operating a cash control account:

Credit drawings
Debit relevant expense accounts.

If you let me know how your book is laid out, I can be more specific.

Business Mileage:
The petrol receipts are not much help for recording the mileage.
You should keep a detailed mileage record.
But if you are doing regular trips, a note of where from and too should be sufficient if you are able to total the mileage at a later date.

tru

I have no idea about fuel, I don't drive so I've never looked into that side of things.

Just put the amount that's on your receipts into the 'expenses' column.

You can do what you like with the money as your a sole trader, you and the business are one and the same. As long as you keep proper accounts, the amount in your bank account makes no difference.

I'm not very good at explaining, where's WHA when you need him?

jasmin10

I've bought one of those Collins account book for Self Assessment Taxes as it was all set out on a week by week page.

There is a bit for mileage etc but I don't know who it will be required of me to keep track of it, Keep the receipts, write all the mileage personnel and business and work of the % or just write down the date, the start and finish mileage and where I have been. It would be a nightmare if I had to write it all down as I share the car with my husband.

With regards taking the money out that I am 'owed' there's a bit for drawing should it go in there?

missmoon

The mileage data is for if you are going to claim the authorised HMRC business mileage rates, which is 40p for first 10,000 miles and 25p thereafter.
This will be shown as your motor expenses instead of the petrol you have actually purchased.

As the car is shared, using this as a method of costing your motor expenses is probably the easier solution.

The alternative is to note all petrol receipts, but then you need to work out an appropriate percentage of the petrol that relates to your business mileage, and as the card is shared, this could be tricky.

As this is your first year, keep a note of business mileage but also keep the petrol receipts.

The money you take out (either as drawings or reimbursing expenses) can be shown in the drawings part of the page.

It sounds like at this early stage of your business, keeping a balance sheet isn't necessary, therefore the only things you need to keep track of are your income and business expenses.

jasmin10

thank you for your answers to the questions. You say it would be easier for mileage by data. Is this where I just write down the start and end of each business journey or did you mean a continuous log at all times?

missmoon

Just write start and end, then at the end of the week you can total up the business miles.

jasmin10

Fantastic, thank you so much for that. Do I not need any proof?

so basically th log will look like
21/5 80025miles to 80027 to (postcode) Total miles 2
25/5 80123 miles to 80127 to (postcode) Total miles 4

Total miles for the week 6

Would this be sufficient?

Sorry but I need thing simple.

missmoon

Yes that's sufficient - maybe add a brief detail of trip - eg customers name, so you can remember the reason if you ever need to refer back to it.

jasmin10

Fantastic, thanks for all your help.