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Sole Trader - Start up questions

  • Associate
  • Practice Licence
  • 23 posts
  • # 109757

Hello

If a sole trader started up their business by having a loan this would be the capital and the loan repayments would be an expense each month?  However what if the loan was from parents and never entered the bank account? Therefore there is no record of it entering the business but then there is a record of lets say a truck being brought for £4000 and monthly repayments to their parents.  How would you account for this?

Also if some items such as uniform, business cards, insurance etc were brought using their personal bank account whilst waiting to set up their business bank account how would you account for these?  Would you need to show the expenses being taken out of the business bank account (as if repaying themselves even though it was at the beginning of starting up the business)?

Any advice in this example would be greatly appreciated, I feel sometimes I way over think things and then get myself really confused.

Many Thanks

Emma

  • Member
  • Practice Licence
  • 13 posts
  • # 109762

Hi Emma,

 

These  are my suggestions:

Purchase of vehicle

DR Motor Vehicles, CR LTLoan

Loan Repayment

DR LTLoan, CR Bank

Purchase of expense items

DR advertising (Uniform and business cards), DR Insurance, CR Capital.

 

Regards,

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