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Post Info TOPIC: Expenses
Macko


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Expenses
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Hi
After some advice pls.
My wife and myself started a Limited company recently.   We've produced a large number of expenses relevant to the business and we've initially used personal money  for expediency, subsequently entering the expenses directly to purchases and cash book as if the business paid  . Periodically we have  withdrawn cash to cover some of the expenses but without being detailed about the cash withdrawal.  I make a note of any cash withdrawals by entering up the bank and cash accounts.
I suspect this is an incorrect practice.   Presume the more appropriate route is to accumulate the expenses then claim from the business.   However being the first year of trading ( Retail), the business is not making money therefore it would not be able to pay back the expenses.   Can you advise how this should be treated?
The reason I adopted this route , as well as through ignorance, we don't have a debit or credit card for the business, HSBC just gave us a cash withdrawal card + cheque book, hence it seemed convenient.
I'd like to ensure that there is some confidence in our records so I'd be grateful for your guidance.   Thanks Mike
PS Hopefully I'll learn quickly , just enrolled with ICB.
confused

  

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Gemma12


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Best way of dealing with this would be to place the entry to expenses and the opposite of th double entry to a directors / owners loan account. Then when you tak the money back out to reimburse yourself the entry would be to the cash book and the directors loan account

hope this helps,

Gemma

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Macko


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Many thanks Gemma.  That makes sense.  Ah well..bit of burning of the midnight oil is in order!
smile

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CBS


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You should also consider the entries you will likely need to put onto your P11D return. Any reimbursed expenses must be declared and subsequently declared as wholly, necessarily and exclusively for the purpose of business use only.

You could consider obtaining a dispensation to avoid this. http://www.hmrc.gov.uk/forms/p11dx.pdf

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Macko


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Thanks CBS.   At the moment we're not PAYE registered as my wife as Director is drawing less than the weekly thresholds on NIC and PAYE.   I assumed P11 was required if PAYE registered and I'm registered as Co Sec and I don't draw a salary , though I've incurred a large number of business expenses.  Thanks for the link I noticed there is a help line, I'll give them a shout tomorrow as I'd like to ensure my compliance, particularly as we've just had the first trading year.    

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CBS


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You may need to think also about drawing a minimum salary just to pay your NI for a pension at the end of the day, unless you are employed elsewhere of course.

Good luck in your new venture.

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Macko


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Already employed, fortunately as the retail business has proved rather expensive this year!  Thanks for the good wishes + advice.



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Macko


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Already employed, fortunately as the retail business has proved rather expensive this year!  Thanks for the good wishes + advice.



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