Small business - takings by owner and taxes.

Derek Atkins warlord at MIT.EDU
Wed Apr 19 12:59:04 EDT 2006


Run a Balance Sheet report to find your ACTUAL equity.
Ignore the account balances -- the equity account don't
show your change in equity due to Income and Expense.

-derek

Wouter van Marle <wouter at squirrel-systems.com> writes:

> On Wed, 2006-04-19 at 01:26 -0400, Derek Atkins wrote:
>> You misunderstand me.  This is just a reduction in equity.  It
>> has no bearing on Income or Expense.
>
> OK fine, but now I've a seriously negative equity. I don't think that's
> so much the idea either. Account tree (part):
> - Equity (initial investment minus takings)
> - Bank account (bank)
> - Expenses
>
> Now I make transfer from bank to equity. And then the equity of the
> company goes negative, as the capital takings decrease the equity. Is
> that sound? Or do I have to channel profits back to equity?
>
> What is the meaning of "equity" really, anyway? (I'm not a native
> English and certainly not a bookkeeper).
>
> Wouter.
>
>> 
>> -derek
>> 
>> Quoting Wouter van Marle <wouter at squirrel-systems.com>:
>> 
>> > On Wed, 2006-04-19 at 01:14 -0400, Derek Atkins wrote:
>> >> Checking -> Expenses:Capital Withdrawal
>> >
>> > The problem in this is that capital withdrawal is not an expense. It
>> > should not be deducted from the profits before tax.
>> > Or do I misunderstand you?
>> >
>> > Wouter.
>> >
>> >>
>> >> -derek
>> >>
>> >> Quoting Wouter van Marle <wouter at squirrel-systems.com>:
>> >>
>> >> > Hi all,
>> >> >
>> >> > As small business owner, I want to take some of the profits now and then
>> >> > for own use. In accounting terms, this is not a salary (as what I pay to
>> >> > my employee - this I can book directly as an expense), though it is
>> >> > taken out of (usually) the bank account of the business, but it is not
>> >> > an expense.
>> >> >
>> >> > How to book these transactions properly?
>> >> >
>> >> > Then I've a small issue with last year's tax. The 2005/06 tax year has
>> >> > just ended (the fiscal year starts on 1/4); but I only just got the tax
>> >> > payable over the '04/05 tax year. That should be an expense for the
>> >> > previous year, however the payment will be done in this year of course.
>> >> > Any easy way to correctly do this?
>> >> >
>> >> > Wouter.
>> >> >
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>> >>
>> >>
>> >>
>> >
>> >
>> 
>> 
>> 
>
>
>

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available


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