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Which bank account to pay tax out of?

  • 05-11-2015 10:01am
    #1
    karenalot
    Closed Accounts Posts: 196 ✭✭


    I am self employed with two bank accounts - a personal one to which my drawings go into and a business account.

    I am paying my tax return and owe X amount. This X amount is made up of rental income from a property that I let and money earned from my job. Question is which bank account do I pay the amount owed from as I cannot split the amount?

    What do people usually do when paying their tax bill? Personal account or business?


Comments

  • #2
    karenalot
    Closed Accounts Posts: 196 ✭✭karenalot


    Perhaps this should be moved into the accountancy forum?


  • #3
    eladnova
    Registered Users, Registered Users 2 Posts: 116 ✭✭eladnova


    Self employed too. This is what I do and it's a system that's worked very well (for me). I have three accounts.

    Business account: all payments get paid into this account.

    Payments paid into this account need then to be processes follows

    Tax account: 40% of everything hitting my Bus account goes in here (ex Vat). I never touch it..it's basically there until Oct and the tax payment.
    Personal Account: remainder goes in here.

    I tried for a while just having two accounts but I had very little visibility over what was tax and what had been processed.

    Probably does net answer your question and being a Ltd(?) your circumstances may be different?


  • #4
    jimmii
    Registered Users, Registered Users 2 Posts: 14,810 ✭✭✭✭jimmii


    If you're a sole trader it doesn't matter which account it comes out of the business and you are one and the same.


  • #5
    DmanDmythDledge
    Registered Users, Registered Users 2 Posts: 890 ✭✭✭DmanDmythDledge


    jimmii wrote: »
    If you're a sole trader it doesn't matter which account it comes out of the business and you are one and the same.
    +1. This would be an issue if it was a limited company.


  • #6
    jimmii
    Registered Users, Registered Users 2 Posts: 14,810 ✭✭✭✭jimmii


    DmanDmythDledge wrote: »
    +1. This would be an issue if it was a limited company.

    Yeh different ball game then but they would be paying themselves as a director via a salary rather than drawings so hopefully thats not he case here!


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  • #7
    karenalot
    Closed Accounts Posts: 196 ✭✭karenalot


    Thanks guys. I am a sole trader so as above if it doesn't really matter which one I will go with deducting it from the business account so the audit trail is easier to follow.

    I have heard people suggesting to set up a separate account to which tax goes into so perhaps I will look into this for 2016.


  • #8
    jimmii
    Registered Users, Registered Users 2 Posts: 14,810 ✭✭✭✭jimmii


    karenalot wrote: »
    Thanks guys. I am a sole trader so as above if it doesn't really matter which one I will go with deducting it from the business account so the audit trail is easier to follow.

    I have heard people suggesting to set up a separate account to which tax goes into so perhaps I will look into this for 2016.

    Yeh it makes things a lot tidier if you can do that some banks will let you have an account for that for free too if you're nice!


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