Treatment of own money used in Business

je55ie

Hi,

Thanks in advance to anyone who can advise me about this. Setup business as a sole trader and bought equipment with my own money lets say €1000. This money is then owed to me by the business. Can anyone tell me how to represent this?

Do I setup a loan account with my name on it?

i.e Debit Bank 1000
Credit Loan (Jessie) 1000 and then when i have the money to pay it back do vice versa. Is this correct?

naoise80

That sound's right.

It can be called a "Capital Account" as it represents the capital you have introduced into the business, but the treatment is the same.

If you do not intend to take the money back out, then it should be shown on the balance sheet under "Capital Employed" , rether than under "Current Liabilities".

kennyb3

jessie37 wrote: »

Hi,

Thanks in advance to anyone who can advise me about this. Setup business as a sole trader and bought equipment with my own money lets say €1000. This money is then owed to me by the business. Can anyone tell me how to represent this?

Do I setup a loan account with my name on it?

i.e Debit Bank 1000
Credit Loan (Jessie) 1000 and then when i have the money to pay it back do vice versa. Is this correct?

You can do that if you want the money back some time soon, or alternatively it just goes into funds introduced (which is the opposite of drawings).

As you are a sole trader you can take €1k or €10k back via drawings as long as cashflow allows.

je55ie

Thanks all for the replies great help, just another question:

when apportioning diesel cost lets say 3 days business and 4 days private I can just apportion 3/7 of the total monthly cost right but when it comes to Insurance, tax and serving of the Van, can i also apportion these costs using probably the same basis?

Cheers for all the help

Jessie

DoMyBooks

In relation to motoring expenses you need to keep a diary of business mileage, at the end of the year add up the total cost of motoring for the year and apportion the business expense in the ratio of the mileage.

Obviously there's complications using a Van taxed commercially for personal use but thats another thread.

Hope this helps.

jessie37 wrote: »

Thanks all for the replies great help, just another question:

when apportioning diesel cost lets say 3 days business and 4 days private I can just apportion 3/7 of the total monthly cost right but when it comes to Insurance, tax and serving of the Van, can i also apportion these costs using probably the same basis?

Cheers for all the help

Jessie

je55ie

DoMyBooks wrote: »

In relation to motoring expenses you need to keep a diary of business mileage, at the end of the year add up the total cost of motoring for the year and apportion the business expense in the ratio of the mileage.

Obviously there's complications using a Van taxed commercially for personal use but thats another thread.

Hope this helps.

Thanks, any idea where I could find out the "complications" like a website or anything

DoMyBooks

jessie37 wrote: »

Thanks, any idea where I could find out the "complications" like a website or anything

Yeah when a commercial vehicle is originally taxed this deceleration is signed.

http://www.lcc.ie/NR/rdonlyres/5CBC07E5-100F-47E0-9E70-24E94674B4C1/0/GoodsDeclarationForm.pdf

Basically if its taxed as a commercial it shouldn't be used for social domestic or pleasure purposes. There was a lot of outcry in the media when the government mentioned enforcing this recently.

http://www.independent.ie/lifestyle/this-man-wants-us-to-pay-euro900-to-drive-a-car-we-already-own-what-next-2315150.html

Have a google and you'll find more articles.

je55ie

Thanks thats great.

can I allocate the full tax cost, insurance cost and servicing costs and just calculate diesel based on milleage? I have about €500 worth of Diesel receipts but the income dont match the milleage. travelling is part of the business but almost more then half of the €500 would be for personal use.

Thanks again

Jessie

djk1000

jessie37 wrote: »

Thanks thats great.

can I allocate the full tax cost, insurance cost and servicing costs and just calculate diesel based on milleage? I have about €500 worth of Diesel receipts but the income dont match the milleage. travelling is part of the business but almost more then half of the €500 would be for personal use.

Thanks again

Jessie

If you use the vehicle only for business, it's all a business expense. If you use the vehicle 50% for business, 50% of any running costs are a business expense and so on.
This goes for servicing, diesel, insurance, repairs and anything else that keeps the vehicle on the road.
Best thing to do is in your bookkeeping treat it all as a business expense and not worry too much about it day to day, then at the end of the year look at your mileage records to figure out what percentage should be moved out to your personal use.

je55ie

hey thanks a millions for all the replies, just another question. Business setup in August 2009. Insurance and Commercial Tax for the Van paid in February 2009. I know there are implications again regarding the private use but I obviously need the van in setting up the business, can I claim the full cost of the tax and insurance or do I have to apportion the cost?