Hey all,
iv been self-employed for the past 12 months. All the money I earn goes straight into my business bank account.
With that account I use the money to buy fuel, tools, well anything to do with the business.
Sometime next year me and my brother are moving into our new house so I will have to start paying my way e.g. rent, food, electricity bills etc.
Where does the money come from to pay for social and personal expenses like hobbies, going out for meals, holidays, rent, food, electricity/tv bills?
Do you take a percentage off of your money you have earned and put it into another account?
So would you have a business account for everything business?
Another account for everything personal/social?
And a saving account like an isa?
Any help welcome,
Regards,
Ashley
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Replies
You dont have too, but as Brian says, it is far easier to keep business and personal seperate, they way all the personal transactions like, direct debits, bills etc dont get all mixed up with the ins and outs of the business account which would require real dedication to keep a handle on.
Keeping it seperate means keeping it simple, same goes for any savings, i have several personal savings accounts but also have a business savings account linked to the main account for putting aside money each month to pay the tax bill. That way youre not tempted to use the money else where as its just sitting in the main account doing nothing!
Take whatever amount you need/want from the business account each month/week or whenever, record it as 'drawings'.
Everything goes through a business bank account; income (cash or other sources), and outgoings. After your outgoings, you'll have some money left.
If you've planned ahead for expenditure like equipment you need, or replacing vehicles when they wear out, take that amount out and keep it aside. From your business plan, take out what you might need to put aside for tax and your accountant's charges. You can't avoid the tax bill, and you need to keep the money aside.
What's left is yours. Spend it on essentials like housing and bills. Some things are critical, such as income tax, council tax, utilities. Others are optional, but really need to be paid; contents insurance is a good example. Then put everything you can in to future planning for pensions etc. Hopefully you will have some left for luxuries like holidays, families or beer.
I'm now depressed as I've never followed my own common-sense advice....
As Dan said it is recorded as drawings.
Ashley.
Paul McNulty said:
That did make I larf ;)
It proberly suprising how many of us know what we should be doing with our money ect... but never actually do it our selves.