Lending a Business Money

TommyMacca

I am self employed

I put money (personal savings) into my business.

How do I legitimately claim this money back?
How do I declare this in my accounts/tax return?

I heard the money can be considered a loan.
Is this true for only a limited company or for someone set up as self employed too?

I also heard that I'm able to charge interest on money lent?
If so what's the rate I can charge?

Finally if I can indeed charge interest then I assume I have a personal tax liability on the interest itself?

Cheers

exaisle

You really need the services of an accountant. You seem to have "heard" a lot, but wouldn't it be better to hear it from a competent professional rather than seeking free (and possible incorrect) advice here?

TommyMacca

@exaisle thank you for your input

With this being 2016 I thought I'd try the Great Illuminating Internet Machine.

I heard its good ;-)

Lockedout2

Agree contact an accountant.

You can't lend yourself money.

You can't charge yourself interest.

Money introduced into a sole trader business is funds introduced in the Capital Section of the balance sheet.

When you take the money back out its drawings in the Capital Section of the balance sheet.

TommyMacca

@Lockedout2, thanks for replying.

My personal experience of accountants is they're expensive, slow, far from infallible and soon to be replaced by software. (rant over)

My savings were wages that I'd paid tax on in the past.

If I lend my savings to myself and then withdraw them at a later date why would I be taxed a second time? That seems unfair.

CIARAN_BOYLE

TommyMacca wrote: »

@Lockedout2, thanks for replying.

My personal experience of accountants is they're expensive, slow, far from infallible and soon to be replaced by software. (rant over)

My savings were wages that I'd paid tax on in the past.

If I lend my savings to myself and then withdraw them at a later date why would I be taxed a second time? That seems unfair.

A sole trader is taxed on the profits. Transfers between you and the sole trade have no relevance.

If you don't want to deal with an accountant try a tax qualified solicitors for five times the price but talk to a professional.

Or is your business a company? Completely different rules.

exaisle

TommyMacca wrote: »

My personal experience of accountants is they're expensive, slow, far from infallible and soon to be replaced by software. (rant over)

I suspect that you've been dealing with the wrong accountants.

You think that free advice garnered from the Great Illuminating Internet Machine is going to be better than that from a paid professional???

TommyMacca

I suspect that you've been dealing with the wrong accountants.

I suspect so too!

You think that free advice garnered from the Great Illuminating Internet Machine is going to be better than that from a paid professional???

I was hoping to obtain a collective consensus of opinion, rather than the singular opinion of an assumed to be correct paid professional, i.e. two heads (or many) are better than one.

exaisle

TommyMacca wrote: »

I was hoping to obtain a collective consensus of opinion, rather than the singular opinion of an assumed to be correct paid professional, i.e. two heads (or many) are better than one.

Three heads have suggested that you consult a professional....that's unanimous by my reckoning...:-)

TommyMacca

@exaisle

Yes I agree, 3 people saying the same thing is good enough for me.
I shall ring my local accountant first thing Monday morning.
Thanks very much for all your help.

NewApproach

Assuming you're a sole trader and not don't operate your business through a company, movements from your personal account and business account are a 'nothing' for tax purposes.

TommyMacca

@NewApproach, thank you for your help. It's appreciated. Cheers.