I have a client who is a sole trader. He's not VAT registered yet, and probably won't be for a few years. He has to travel alot so has made a not of all his business related mileage, month by month. How do I journal it - he's not drawn any money for it?
For instance Month 1 his monthly mileage was 430 miles, therefore £193.50.
Does this need to go from Capital Account to Motor Expense as he hasn't drawn the money?
Yes that is the way I would do it as he is not a LTD co. So Capital intro account to the motor expense a/c.
Do you need to do it monthly? If not collate them and do it in one journal at the end of the year. If hes not after any management accounts and he isn't VAT reg if you say have 12 months worth I would had them all up and do it as one journal.
He's actually done a monthly mileage spreadsheet and would like a P&L report monthly just so he knows what he's spending and where, so its just as easy to do a monthly journal. He's only really got about 3 months worth up to end of tax year. I just wanted to double check that I was recording it correctly, as he's basically paid it himself, but wants it to show on the business.
I sometimes use an extra bank/petty cash account set up to record these kinds of expenses and then when the owner wants to reimburse themselves just do the transfer.
They have been using their own money to start while they set up a bank account so I've been using the petty cash account, however seems silly to do 2 journals when I can cut out the middle man and just use the one journal. There's no VAT, so think I will go with the simpler version.
