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If you have your own company, the lines between your personal and business lives can easily get blurred. While they’re obviously connected, they’re also legally separated too. This means financial matters can get a bit confusing from time to time – especially so when it comes to expenses.
The question is, if you’re out and about and buy some new company equipment with your personal money, can you claim that cash as a business expense? Obviously you haven’t used the business account, so does this mean you’ll find yourself saddled with the bill?
Fortunately, that isn’t the case. While a slight bit more complicated to sort out, it’s hardly a difficult process at all. Here’s how you do it.
Once you’ve paid for whatever it is you’re purchasing you enter it into your accounts as a regular business expense, except that you note the money came from you personally. That cost is then added to your director’s loan account. From then you’re free to withdraw it and reimburse yourself. Overall, a pretty straightforward affair (although as with all things accountancy-related, probably a bit more complicated than it needs to be).
Note that you’re also required to fill out a P11D expenses form for HMRC. You can find all the information you’ll need for that here. Also note that, to be an allowable expense, the purchase must meet HMRC’s “wholly and exclusively” rule – meaning it has to be a business buy, not something frivolous.
Over the last few months of 2017 and the whole of January, client managers are busy reminding people of upcoming deadlines and things they’ll need to do to make it easy for them to keep on top of their Self Assessments.