accounts help?

[ja-lula-belli]

Hi all i have been minding since October and its going really well i have been keeping up to date with my paperwork and accounts but i just had a thought do i take out a wage for me through my earnings or are my earnings classed as a wage?

Ja-Lula-Bell*****minding

[bunyip]

I'm not at all sure on this one, especially as I've yet to come across a CM working alone who gets involved in wages as a separate issue from profits. Tbh, I'd check with an accountant or call HMRC, who should be able to tell you our options.

My guess is that you could draw (and account separately for) wages from the business (as opposed to profits) if you were a limited company or a partnership. As a self-employed sole trader, most CMs would simply take the profits as their earnings.

More generally, a self-employed sole trader might have the business pay them a wage if there were money in the business that was not profits. Most commonly, this would be money borrowed from the bank to set up the business: many businesses lose money over the first few years which is built into their business plan, so they borrow enough to live on as part of their start-up loan. This doesn't seem to be the case with CMs, due to the nature of the business and we're often the 2nd income, rather than 'chief bread-winners' in our respective households.

Posit: assuming you could and did pay yourself a wage, there'd be swings and roundabouts. You'd probably reduce your tax/NI bill with regard to profits, but then become subject to tax/NI on the wages. You'd need someone better qualified than me to look at the details, but at first sight I guess you'd probably gain or lose very little either way whilst introducing a whole new level of complication and paperwork.

[tulip0803]

As Bunyip says childminders tend to not draw a wage (I don't know any). Your profit (money left after expenses) is what you earn each month.

[moggy]

Hi all i have been minding since October and its going really well i have been keeping up to date with my paperwork and accounts but i just had a thought do i take out a wage for me through my earnings or are my earnings classed as a wage?

Ja-Lula-Bell*****minding

What you make after your expenses/tax is your income. As bunyip says, you are getting into a very complicated area if you try to get into paying yourself wages. Keep it simple.

[ja-lula-belli]

Thanks guys i thought as much i just suddenly had that idea and wondered if i had been doing it wrong plus at the moment im still in minus as im so new and start up costs anyway. Thanks for your replies . X

Ja-Lula-Bell*****minding

[Simona]

Self employed people do not pay themselves wages as such...it is called 'withdrawls'

Each month you do your accounts by taking your expanses from the monthly income... what is left is a profit from which you can withdraw money for yourself...we are not waged and that is why we can't be included in the minimum or living wage...it does not apply to us.