wages as an expenditure

[coffee-time]

I went to a finance course on saturday and was told that we can draw wages for ourselves, has anybody heard of this and can this then be added to your expenditure, for example if i earned £1000 a month can i then pay myself £400 per month. hope this makes sense. thanks for any advice.

[samb]

No- our wages are everything left after expenses.

[coffee-time]

ive been trying to explain to my friend (who was at the course also) that wages or drawings as they called it at the course, are not an expenditure they are our profit, but the paperwork we were given at the course shows wages/drawings under the list of expenditures! so being given the wrong information, its the first time this course has been done and I think they learnt more from us than we did from them!!

[rickysmiths]

Any wages you pay anyone else would be an expense.

[Chatterbox Childcare]

Wages are something you pay to any employee not yourself. Ring the person who took the course or email so you have something to show you friend.

As we are self employed, unless you are with an agency, you take drawings and these do not go in your expenses

Who ran the course?

[EmmaReed84]

It sounds like the person delivering the course is confused.

All my business income goes in to one account. I get paid on various days throughout the month, then at the end of the month I "pay myself a wage" one monthly payment. I leave a % in my "business account" for things like tax, NI, memberships, resources and enough so that it can build up so I can pay myself a set wage each month, even if I have been off/sick.

Many CM's do this as it is good business practice, nothing to do with tax and putting the "wage" as expenses. Perhaps they have got this mixed up with CM's paying assistants wages?

[hectors house]

Im sure that only applies to private or public companies where the directors would draw a salary. Like others have said if you are self employed the difference between income and expenses is profit which can/is be taken as wages.

[coffee-time]

like i said the course is new and the 2 ladies running it were good but were not childminders or accountants so didnt actually know all the facts! they were honest from the beginning though and said they may learn from us too! they also talked about doing a yearly budget every year which personally i dont think is needed, and also bank reconciliation, so balancing your bank balance each month, i dont know if any of you do this but id never heard of it before and personally it would be just another bit of paperwork to do! i know whats in my account and whats coming out as i check it online every few days!

[Simona]

like i said the course is new and the 2 ladies running it were good but were not childminders or accountants so didnt actually know all the facts! they were honest from the beginning though and said they may learn from us too! they also talked about doing a yearly budget every year which personally i dont think is needed, and also bank reconciliation, so balancing your bank balance each month, i dont know if any of you do this but id never heard of it before and personally it would be just another bit of paperwork to do! i know whats in my account and whats coming out as i check it online every few days!

As said below your income...what comes in every month....minus your expenses each month leaves you with a profit
From that you can 'withdraw' money for yourself after saving some for your taxes which usually are paid in January and July each year...

we are not waged as self employed
And yes as a small business you should reconcile your money each month...it takes 10 minutes

These ladies are correct in many ways but they seem not to use the appropriate terminology when referring to self employment

[coffee-time]

[QUOTE=Simona;1298127]


And yes as a small business you should reconcile your money each month...it takes 10 minutes


really! it seemed complicated and im not good with numbers, maybe i should look into it a bit more then!
Thanks

[Simona]

[QUOTE=coffee-time;1298162]

And yes as a small business you should reconcile your money each month...it takes 10 minutes


really! it seemed complicated and im not good with numbers, maybe i should look into it a bit more then!
Thanks

It is not to do with numbers but good financing to ensure out of your income you have taken the expenses away.
what you are left with is your monthly profits...take your withdrawls and make sure what you are left with in your bank and in cash reconciles....the word is 'cash flow'

If you do your accounts on a spreadsheet (Excel) it does it for you as the formulas do all the calculations.....
good luck and hope you find it useful??

[Chatterbox Childcare]

I use a computer package called Quicken - quick and easy to enter all receipts and at the end of the year it produces a profit and loss.

I reconcile all my accounts as soon as the bank statements come in. Reconciliation is no different to you have a statement and ticking of receipts against the entries.