Think I've done this one correct, but just wanted to check please.
I have done the accounts for one of my sole trader clients and his mileage came to just over £5k for the year (used his personal car for business). He submitted some of his fuel receipts (which I put through to reconcile the bank) which equated to about £2k, so I did a year end adj to make the motor expenses up to the £5k in the P&L (to make up to the 40p per mile x business miles travelled).
He didnt reimburse the remaining £3k back to himself yet, so this is sat on his balance sheet until he draws the cash out to reimburse himself. Can I just confirm that this is correct.
from what your saying the client is charging business mileage so 40p per mile for the first 10,000 miles then 25p per mile thereafter.
There is no reimbursing fuel, it is travel and subsistence and the required evidence is the clients mileage log where he must keep a record of every business mile traveled.
No log of mileage, no reimbursement.
Petrol receipts don't come into this.
Hope that this helps,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi Shaun. I've got the mileage log so that bits ok. It's just he hasn't yet reimbursed himself with the cash back to himself yet, so I was just double checking that to carry this forward on his balance sheet til he pays himself back? Richard
there is a bit of confusion here. You are claiming mileage by the sound of it, but he has paid for fuel through the business acoount too? If that is the case, the correct treatment would be to put the fuel expenses to drawings and then journal in the mileage. As Shaun says the mileage is 40p per mile for the first 10k miles (£4000) and 25 p thereafter. Does this come to £5k (would looka bit suspicious!, but maybe you are roundingf for sake of an easier post here). When you do the mileage, journal dr mileage/travel and credit capital introduced. If he reimburses himself then dr drawings. cr bank. The net difference is the same as you have but the postings are clear this way rather than mixing up the treatment and therefore showing the pedantic taxman you have dealt with this clearly.
Morning Rob, Yes you are correct, I only put £5k for ease of posting on here.
The figure in my P&L for motor expenses is exactly the figure that I got from my mileage calculation. I'm just wanting clarification regarding the carried forward balance sheet figures.
As the sole trader hasnt reimbursed himself with the cash yet from the business for the £5k, and rather than put this to dr : Motor expenses cr : capital introduced, I have done dr : motor expenses cr : creditors (ie creating a creditor account) as so to have this figure running forward so when he can pay himself the cash, the creditor balance reduces (or clears if he pays himself the full amount).
If this was a company I would say it would be the right way (though you would probably cr directors loan) but as this is a sole trader you would be better to use capital introduced, there is no difference between the trader and the business really so one cannot owe the other anything. If there was an inspection it would be reasonable for the inspector to ask for a detailed analysis of drawings and capital introduced, potentially there would be a large hole here if treated the way you are suggesting. If someone else paid for the fuel, then I would suggest creating a creditor account. It's possible nit picking but I feel that is how it would normally be done (there will be a hundred posts disagreeing now!) Rob
Credit the owners Capital Account. This is effectively a creditor account anyway. Any money withdrawn then is simply posted as drawings and the audit trail is less complicated (you can always enter a comment in details to say its for reclaiming motoring ex's)
