Hi, I've looked at a couple of related previous posts but i'm still unsure on this....
I'm not sure how to record and categorise the monthly salary payments I make to my current account from my business account?
My business account is linked to Quick books so the transactions show up automatically, however it wants to add these salary payments an expense and I'm not sure how or what to change them to.
Any help would be much appreciated.
Hi there, JoeGilson,
Let me clarify things out for you.
You're taking funds from your business. Thus, you can categorize the salary payment paid to yourself under the Owner's Equity account.
Upon sharing this solution, I still suggest consulting your accountant first for proper guidance. He/She might have additional instructions on how to categorize payments to yourself.
I've got an article for more details: Salary or Draw: How to Pay Yourself as a Business Owner. This link provides tips to determine how you should pay yourself as a business owner.
Keep me posted if you have follow-up questions and I'll get back to you.
Thank you so much for your response!
I've added this payment I made to myself as 'Owners Equity' as you've described below, however it still goes into my 'Expenses' category. Is this correct?
I would have thought it should go somewhere else, as the rest of my expenses are reducing my taxable income, whereas this is a taxable sum which i'll need to separate out when doing my tax return...
When you withdraw money in relation to wages you are paying yourself it will not be included in the taxes section as this is in relation to VAT and it would be classed as an expense to your business.
Hi John C,
Thanks for your reply.
im sorry, this still doesn’t really make sense or answer my questions though. it may be the fact that I am UK based and a sole trader which is causing the confusion?
Is there anyone specific I could speak to to help me get an answer to this?
We are based in the UK. If you are not using one of the payroll systems you will have to create the expenses manually or add them from the banking screen after categorising them to the expense account you have set up in relation to your wages/owners withdrawal.
I've recently joined QBO and I am in the same position as you were in. I am registered as self employed, but I can see the problem you encountered.
I want to withdraw some money to pay myself, but from what I can see, it looks as though I have to add it as an Expense, which would mean that it wouldn't be included in my profit at the end of the year, whereas it should be, so that I can pay Income Tax and NI on it.
How did you fix this in the end?
Hi there, thetrew.
Yes, you'll record this as a business expense in the Self Employed product when adding the transaction in if you select owner withdrawal.
If you want to categorize this to others, I recommend consulting an accountant. They can help you assist to choose the correct posting account so it will be included to pay yourIncome Tax and NI on it.
Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.
I am having the exact same problem.
I do not know how to list this in Quickbooks On Line
I do not have the self employed version, it's the accountant version I think.
There does not seem to be a category for listing these payments as a none expense.
Has anyone else in the Uk had any luck with this at all?
Many thanks in advance
Thanks for commenting on this thread,
So if you are not running payroll in your Quickbooks.
You would need to create and set up an expense account with the category as either wages or owner withdrawal.
You would have to create an expense manually and selecting the expense account of wages or owner withdrawal you have created in Quickbooks or adding ti from the banking screen after categorising them to the expense account that you have set up that is either called wages or owner withdrawal.
yes of course
1. go to accounting>chart of accounts
2. click new top right-hand side
3. a pop-up box will show in account type select expenses> detail type select payroll expenses >name you can change it to what you want it to be so it could be wages >save and close
Then when you go into creating an expense you can then select that new category.
does this thread actually answer the original question...?
i too am self employed (builder) using QBSE and the transactions showing coming out of my Business bank account to either 'my current account' or 'dominoes pizza' or 'morrisons' for my beers etc etc are all..
so i want these transaction to be shown as my salary, so at the end of the financial year can be added up so i then work out what income tax i owe
simple i would hope??
so im presuming i categorise those transactions as 'Personal'
is this correct or am i being stupid?
and may i just add, the reason why i imagine a load of us use QB is to avoid accountancy charges so please refrain from advising me to speak to an accountant
thanks in advance
Hello there, @tonyfowlerrefurb.
When you pay something to use for the business, it's a deductible business expense. This way, it would be classed as an expense to your business that won't be included to VAT.
Though you're avoiding accountancy charges, I still encourage to seek professional advice from tax and accounting experts to get more insights. That way, you'll know what income tax to owe when categorising transactions in QuickBooks.
Please let me know if you have other questions in QuickBooks. I'll keep my notifications open. Stay safe and well!
wow...its proper smoke and mirrors it seems
how come no one actually answers the question
like put your transaction in the ?? category
then give me the reasoning if you like
or say ....its really tricky which category you put it in because theres ways to avoid tax doing it this way...or another hence speak to an accountant
I think it was me who originally asked this question?!!
I have to say, I’m really not sure about the proper answer, but I’ve ended up using the category of ‘owners equity’ which I can just select from the drop down (like you would for other expenses when you’re categorising them).
I tend to try and do bulk amounts to make it easier to go back over if I ever needed to; Generally one big one to cover my living costs (mortgage, bills etc.) then a separate amount of x hundred quid to cover your Dominos etc!
I did actually use an accountant to do my tax return last year, and this seemed to work from their perspective.
like I say, I’m not really sure this is the best way and was a bit of a temporary fix for me but so far it’s still doing the job.
Good luck! cheers,
thanks for the reply Joe.
yeah it seems from a few responses ive had, from other sources, there isnt a right or wrong way to do it.
which i find a little strange but anyway...
someone has told me to put it under 'personal' while others seem to favour 'owner withdrawal' stating its still classed as a business expense.
i guess as long as the software has a way (in the reports) of showing/filtering out this amount and displaying it then thats the main thing, as we can then use this amount in our tax returns.
it does seem odd though that this part of the whole book keeping process is a little unclear..
im sure a large percentage of people using quickboooks are really only interested in one column...
not how much i spent on 'office equipment' or 'car expenses' or even 'meals&entertainment'
but.....how much i earned and what i owe the tax man
Head ache in it not being clear even looking through community responses- I am on self employed quickbooks- I pay myself a mthly amount as my own wages- do I put under personal/ or business-owner withdrawal??
I'd be glad to help you record your monthly wages in QuickBooks Self-employed, how to mark self employed wages.
When categorizing expenses, the Wages option is unavailable. Since QuickBooks Self-Employed (QBSE) doesn't have a payroll service, you can only categorize it as Other Business Expenses and tag it as Personal.
However, I'd recommend getting in touch with your tax adviser. They'd be able to give you advice on how to report this type of expense and answer any tax-related questions.
For your reference, you can take a look at this write-up: Categorise transactions in QuickBooks Self-Employed. Click on the Learn about income and expense categories in QuickBooks Self-Employed section to know more about the payroll tags.
Additionally, the following article is a good reference. This will provide you lists of categories to help guide you in tagging or categorizing your transactions as well as organizing them accurately in QuickBooks Self-Employed: Updates to expense categories in QuickBooks Self-Employed. Even if this article is for QuickBooks Self-Employed US, the same principles can be applied to your UK account.
Feel free to post again if you have further questions about this or anything in QuickBooks Online. I’m always here to answer them for you and make sure your taken care of. Have a good one.
I'm having the exact same problem! Having spent hours reconciling my accounts, I can't see anywhere to put my "owner's draw" for tax purposes. It's still counting all my owner's draws as expenses and has taken it off the business into a place where I can't see it for tax purposes. Like you, the whole point of this thing is to see how much money is making an dhow much tax I'm going to have to pay on it. It seems such a simple thing to ask, yet the dashboard and the whole kaboodle is full of everything but the basic information!
Am I missing something? Surely there should be a category where you can see what you've drawn and therefore what tax you're going to have to pay on it.
If you've figured it out, please please will you let me know the secret to unravelling the mystery of so many numbers yet so little relevant information?