How to pay myself as a sole trader?

[Mike or Penny Novack]

Tom Badran wrote:

>I'm registered as a sole trader in the uk, and up till now all my income has
>just gone straight into my business account (which is also an account under
>assets in my gnucash accounts).
>
>However i now need to transfer money from here to my personal account
>(essentially paying myself as far as i can tell). Im not sure how best to
>represent this in gnucash however. Should i set myself as the only employee
>and pay myself like that, or should i set up another asset account called
>"personal" or something and just do direct transfers from business->personal
>every time i use money for non business transactions, or something else?
>
>  
>
Questions like this are REALLY accounting questions related to the laws 
and customs of particular jurisdiction. I cannot speak with certainty 
about the UK, but HERE (US) you would most certainly not be an 
"employee" unless your trading company was incorporated. You would set 
up a "draw" account.

If you were NOT taking any of these "profits" (drawings in anticipation 
of profits) at the end of fiscal year close of books your profit (or 
loss) for the year would be closed to "owner's equity" (your investment 
in this business operation). So normally the "draw" account would be set 
up as a sub account of the equity type (a draw is a withdrawal of 
investment).

Michael