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I am a sole trader in the UK (technical description of being self employed) and have signed up for QuickBooks' Self Employed package. I have a separate account for business transactions with a different bank and, for the most part, everything is a-okay.

My issue is that I cannot seem to figure out how to reimburse myself for expenses paid for via my personal account. I sent QuickBooks SE a help request but they came back explaining how to import from CSV...

Here's a theoretical example of a situation I may face regularly, apologies if it's not explained correctly, it's a bit of a nightmare to understand:

On January 1st 2016 I transfer myself £1000. Of that, I incurred no out of pocket expenses between the last transfer date (25th of December 2015 as an example) and 1st January, therefore it appears as "income". On the 20th of January I transfer myself £200 and between the 1st of January and the 20th of January I incurred £500 worth of out of pocket expenses. Therefore if I try and split the second transaction down by expense category, it amounts to more than the second transfer, but less than the first. As far as the app is concerned, even if I reimburse myself the full £200, I've paid myself £1000 and only been reimbursed £200 of that meaning I am liable to pay tax on £1000 of "earnings" rather than the true figure of £700.

What I'd like to know is should I be importing my personal bank card and credit card to QuickBooks SelfEmployed too and excluding the truly personal transactions or should I split the transactions where I "pay" myself into the various categories (and if so, how do I deal with situations above) as I have been doing?

Any help would be greatly appreciated.

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    I would be very shocked if you giving your business money counts as income. It is more likely it should be booked as a loan to your business. Your business likely is then able to repay your loan without tax consequences. – Grade 'Eh' Bacon Oct 3 '17 at 17:06
  • @Grade'Eh'Bacon thing is though, I’m not “giving” money to the business account, so when it comes time to submit my taxes to HMRC, the money I’ve given myself is lumped into “income” and not split out by expenses. – ScottMcGready Oct 3 '17 at 20:37
  • I'm not sure we understand eachother. What I mean is, when you initially transfer 1000 GBP to your business account, I really doubt that should be considered as income. Yet in your example, you are assuming it will be. Honestly I would advise you to read up on whatever self employment income reporting guides the UK puts out, so you can become more familiar with the terminology / the way the system works. – Grade 'Eh' Bacon Oct 3 '17 at 20:45
  • I never transfer £1000 to my business account though. – ScottMcGready Oct 3 '17 at 20:46
  • Okay then what does this mean? "On January 1st 2016 I transfer myself £1000." If you want an answer to this question you may want to consider re-writing what you've written in that paragraph because that's what I took away from it. – Grade 'Eh' Bacon Oct 3 '17 at 20:49
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For anyone that's curious, I had a number of chats with Quickbooks who recommended I import only the relevant business transactions from my personal account & personal credit card in order to lower the tax liability. This way money "paid" from the business account to myself rightly shows up as a transfer and not as income. This means when generating a tax report, it calculates the correct rate of tax to be paid based on income minus allowable expenses, regardless which account they came from.

  • You can mark your answer as "accepted" if it solved your problem. – Ganesh Sittampalam Jan 3 '18 at 11:29
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Any money that ScottMcGready gives to the company is a personal loan that must be repaid by the company at some point without tax consequences.

Any money that the company gives to ScottMcGready is either salary (Scott pays income tax, company counts this as cost), or a dividend (Scott pays dividend tax), or a loan (Scott must repay the loan).

  • Why can't it be "an infusion of capital" (like in the case of a corporation which sells more stock)? – RonJohn Oct 4 '17 at 18:21
  • Or an advance on expenses, or reimbursement of expenses incurred. Which is what his question is about. – Vicky Oct 4 '17 at 20:54
  • I don't transfer money to my business account, rather the other way around (from business to personal) – ScottMcGready Oct 5 '17 at 3:55
  • There's no company; he's a sole trader. There is no difference in ownership between his various bank accounts; they're all his money. – Mike Scott Oct 5 '17 at 7:20

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