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Hello,
Im very new to QuickBooks and running a business also so sorry in advance if this question seems a bit silly.
Basically I recently set myself up as a sole trader and made a payment from my business into my personal account, how do I mark this as a payment to myself? I had initially set myself as a supplier by accident but it marked as an expense so I have deleted it and dont know how to go about categorising it correctly within the QuickBooks app.
Thanks
-Connor
Solved! Go to Solution.
Hi SassH, thanks for joining this thread - unfortunately in this case it is too good to be true, you would categorise this transaction as an owners withdrawal - you can see our guide here for full info on this category in the Self Employed product :smiling_face_with_smiling_eyes:
Hello Connor,
Maybe you could treat it as 'wages'? So out of bank and allocated to wages.
Hope that helps
Chris
Hi @Beggsy
This does need to be treated as wages or drawings.
Setting yourself as a Supplier is wrong (I think you know that) as the payment then becomes an expense.
You are effectively taking money out of the business which has not yet been taxed - so you need to keep track of it.
Yeah I thought so, Its just automatically came out as an expense on the app but I cant seem to find where the option is to allocate it as a draw. When I press it I only get options to mark it as an expense.
I don't use the app that much so will take a look, however, I need to pop out now. So will look later.
Are you using QB for sole trader or company?
Thank you!
Yeah as a sole trader. Iv seen there are some options for payments to be made to employee's behind another paywall but but I dont have any employees. I only run it by myself.
Cheers!
Hi Beggsy We appreciate that you state that you're a sole trader however are you using the self employed product or one of our small business products?
I believe I am using the self employed product, where can I check on my account to make sure?
Hi Beggsy What options do you have on the main menu on the left-hand side?
Here are all the options I have
Im also using the QB Self Employed and am a sole trader with no employees.
If I mark my payments to myself as an Owner Withdrawal, it is excluded from allowable/disallowable expenses and is taxed as a profit.
If I mark my payments to myself as wages & staff costs, it is shown as an allowable expense and reduces my tax liability.
Clearly, I love the second scenario and feel very attached to it. Question is, is it to good to be true?
Hi SassH, thanks for joining this thread - unfortunately in this case it is too good to be true, you would categorise this transaction as an owners withdrawal - you can see our guide here for full info on this category in the Self Employed product :smiling_face_with_smiling_eyes:
Anything that seems to good to be true usually is, @SassH
Wages & staff costs, as the name suggests, is for employees of the company. Their wages/costs are taken off your Top Line (Gross Profit) along with other allowable expenses in order to calculate the profit.
From this profit, the jolly tax-man takes his cut (excuse pronouns - for taxman read also taxwoman, etc.) which leaves you with your Net Profit.
Your 'pay' is actually drawings from this net profit (what is left after everything is paid).
Hope this helps.
Thank you for the clarity. Dammit.
The linked answer says to "Use the owner's withdrawal category when transfers take money out of your self-employed finances for personal use.". I can't find an "Owners Withdrawal" category in my QBO. Am I missing something? I have an "Owners Investment / Equity" category. Can I just transfer my salary to that?
Hi OwnerDriverLightHaulage We can see that you're using a SimpleStart account therefore owner withdrawal isn't a default category. You would have to create an Equity account within the chart of accounts and select this account within the category field of an expense or journal that you create in relation to owner withdrawal.
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