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How can I display Director's drawings from a company I used to be a director of in a sole trader account?
From January 1st 2009 I have been a sole trader but until the end of December 2008 I was also a company Director and need to show the drawings I made from that company during the 2008-2009 tax year. The other Director of the company - who still is a Director has also opened a FAC account for Limited companies. Will I also need to upgrade my account to show these transactions or is there a way round it?
Thanks!
Thanks!
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Inappropriate?A sole trader and a ltd co are separate tax entities so regardles of whether you could or couldnt do it in FAC, I really wouldnt.
As a personal tax payer you do not need to account for drawings for a Ltd Co, you need to account for PAYE and Dividends, which is a different matter.
I hope that helps a bit !
Phil1 Comment
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Thanks Phil - so what is the difference between a dividend and a drawing? -
Inappropriate?Hi Kirsty, sorry for the delay in replying, I had a long weekend away.
The difference is as follows:-
1. Drawings refer to sole traders and partners in a partnership who tend to draw money ot of the business but are taxed on all the profits ( or in the case of a partner their share of the profits ).
2. Dividends are paid by a company to a shareholder of a company. A person does not just draw money out of teh company, like you would as a sole trader or partner, as the money belongs to the company. the only way to extract money is by way of 1) a loan from the company to the person 2) salary 3) expenses 4) dividends
I hope that explains a bit further.
Phil
