Accounting for drawings?

Terryfields

Hi,

So I'm in the process of setting up a business and I'm confused about where to place drawings. I've been told to prepare a profit and loss and a cash flow projections.

I'm not sure, actually I haven't a clue how to treat drawings, I intend on taking just enough to pay my personal rent and living expenses.

On a profit and loss do I just calculate revenue minus expenses, minus tax = profit and then state drawings. Also can I take drawings in a minus profit month?

Cash Flow, where would drawings go on a cash flow, opening balance less drawings = closing balance?

Should I put tax on a cash flow? Should I hire an accountant!?

Thanks for any help you can give me.

Alan Shore

Should I hire an accountant!?

Based on your questions - that might be the best option.

Immy

Profit and loss is income less expenses, no drawings.

The type of cash flow you are referring to is basically money in less money paid out. What comes in and out of your bank account, so yes drawings and tax could come in here.

Maybe better to speak with accountant and you can get on with your core business.

bmwguy

Absolutely hire an accountant. Record keeping could be done by anyone but not accounting. For the record on your balance sheet Debit Drawings and Credit Bank (assuming cash comes from the bank account).

Terryfields

Thanks for the responses, these are just for projections at the moment, I will get more thorough advise once I'm up and running. That helps Imma, thanks.

Should Have Done Arts

The bank will have a good idea of your drawings from the bank statements. If cash flow is tight there are templates online for projections, Im sure.

dbran

Hi

You need to get an accountant as it does not seem that your level of knowledge is up to what is required. What is this required for? Banks, DSP etc. Are you a sole trader or limited company?

An accountant should be able to sort out what is required to be done in relatively little time leaving you to get on with setting up your business.

Best of luck with this.

dbran

Terryfields

Thanks dbran, ye are probably right, I'll go hire an accountant for an a couple of hours, it's just for the banks at the moment.