Sole trader help with paying bills

[jelevents]

Hi I am 7 months into my business and so far have paid my mortgage from a savings account by transferring to my current account, but savings are gone so do I......
Change the direct debit from my current to my business account?
Transfer money from business account to current and record as drawings?
I have already changed my mobile dd bill from current to business account as it's primarily for business, and expenses for the business and fuel etc I pay from my business account.
My wife has her own job and her wages cover bills and food etc.
Any advice gratefully receivedy

[kiethton]

I would employ an accountant

[TooMany2cvs]

If you're a sole trader, then there's no legal difference between your personal money and your business money. Whether you choose to keep your money across two separate pots is up to you.

So long as you can account for all your trading income for the tax man, it's all good - you might also like to account for all your trading expenditure, too, to offset against that for tax...

[Mr Pointy]

I would suggest you do not change the mortgage DD to the business account & that you keep the transactions on the business & personal accounts clearly separated. Why don't you set up a DD to pay yourself a sum of money (salary) from the business account into your personal account each month. it might be a good idea to also have two credit cards (one for business & one for personal) as it makes keeping track of business expenditure much easier.

You should have a accountant though so you can be sure your tax affairs are optimised.

[jelevents]

Mr Pointy said:

I would suggest you do not change the mortgage DD to the business account & that you keep the transactions on the business & personal accounts clearly separated. Why don't you set up a DD to pay yourself a sum of money (salary) from the business account into your personal account each month. it might be a good idea to also have two credit cards (one for business & one for personal) as it makes keeping track of business expenditure much easier.

You should have a accountant though so you can be sure your tax affairs are optimised.

Thanks that sounds like a good idea, I have a business and personal debit card and will be looking into getting an accountant to help with end of year taxes etc.

[KevinCamaroSS]

I am with Mr Pointy here. Set up a standing order for your drawings and pay the mortgage from your personal accounts.

[Sparkyhd]

Why set up a standing order? Who knows month to month how your business will perform. Just do an online transfer as and when.

[Mr Pointy]

jelevents said:

Thanks that sounds like a good idea, I have a business and personal debit card and will be looking into getting an accountant to help with end of year taxes etc.

I don't know what type of work you are involved in but an accountant is not just there to do your tax return, they can advise you on issues such as how to ensure you are claiming all allowable expenses & what records you need to keep (some of which are a legal requirement). As an example, if you are claiming for use of a vehicle you may well need to keep detailed mileage records - you can't just guess at a percentage of the annual mileage as being business use.

You do know you will have two tax payments a year don't you (end of January & end of July)? You are putting away 25-30% of every invoice in a separate bank account so you can pay these? Don't forget it's not just tax, NI is due on those dates as well.

[Monkeylegend]

I was a sole trader for 15 years. Each month I paid enough money into my private current account to pay the bills and enough into my business account to pay the bills. I also put surplus into a savings account/ISA.

As long as you keep a record of all your business income and expenditure for your tax return you should be ok. I had an accountant who did all my online tax returns and PL statements, but was never once asked in 15 years of trading to show copies or records of any bank accounts, and never had any issues with HMRC.