Which bank account to pay tax out of?

karenalot · 05-11-2015 11:01AM #1

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?

karenalot · 06-11-2015 10:12AM

Perhaps this should be moved into the accountancy forum?

eladnova · 06-11-2015 10:28AM

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?

jimmii · 06-11-2015 10:30AM

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.

DmanDmythDledge · 06-11-2015 01:37PM

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.

jimmii · 06-11-2015 02:40PM

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!

karenalot · 09-11-2015 11:09AM

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.

jimmii · 09-11-2015 12:20PM

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!

Which bank account to pay tax out of?

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