Sole trader (expenses)

Son

Hi

I started a business about 2-3 months ago.
I opened a biz bank account.So far when i wanted to buy supplies or pay for certain running expenses i've been taking the money out of my personal bank account until i get some money into my biz account.Also i have no atm card for the biz account which makes it hassle every time i want to take money out which is quite often (they don't offer an atm card on this account)

I've been keeping receipts for everything but seen as i didn't take the money from my biz account to pay for these things will this cause problems in the future?

namenotavailablE

This shouldn't be a problem so long as the income you previously earned (in your non-business account) was legitimate and taxed.

You'll need to explain to your accountant the details of the 'out-of-pocket' expenses so that s/he can correctly include them in your end-of-year accounts- keep the receipts in an organised manner.

Son

Thanks

crazzzzy

if the funds are available, you could put money into business a/c from personal a/c as funds introduced which would save the hassle in future.

Or when you have money in the business a/c, write a cheque to cover expenses already paid from personal a/c but keep receipts to back up amount.

Son

The thing is I don't have an atm card for my biz account and im always needing €50 here €150 there,small amounts.So it would be a pain having to que up once or twice a day for this.

I provide a service and I also provide the materials,so what i have been doing for eg:
I take out €100 to buy the materials
Then charge €100 labour but when im banking it instead of putting €200 into my biz account i put in the €100 labour as the other €100 came from my personal which goes back there.
Am I ok to keep operating like this or do I need to change?

namenotavailablE

It's probably OK but less than ideal/ potentially messy.

I'd go with what crazzzy is suggesting- bank the FULL amount to your business bank account and then write a cheque on that account to recoup the expenses covered using personal funds. Keep a full set of receipts/ details of the expenses you paid out of personal funds and match periodic totals of these agsinst cheques drawn on the business account. It provides a full paper trail of the transactions and will make the accounting easier at the end of the year.

This will make it easier for your accountant to keep tabs on customer invoices issued against amounts lodged and also might appear 'less suspect' (you're lodging less than what was actually received from a customer which might trigger alarm bells/ queries with Revenue, for example).