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Drawings on a P&L Report

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Madfish
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Drawings on a P&L Report

Hi All,

 

Our company is owner operated so no employees or wages. We take all of our "wages" as a drawing. We use the spend money and allocate it to a "director loan" account. My question is when I run a P&L report, Drawings do not appear in the report.

 

What am I doing wrong?

 

Cheers and thanks for the help.

3 REPLIES 3
Dee-Workman
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Re: Drawings on a P&L Report

Hi @Madfish

 

Drawings are not a deductible expense, therefore they should not appear on a profit and loss account, they are part of an equity account and should always appear on a balance sheet in the equity area.

 

A profit and loss account reflects income and expenses only.

Madfish
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Re: Drawings on a P&L Report

OK.. Apologises, just trying to get around the jargon... 

 

The lady that has set up our MYOB (with very little training) has set it so that when you pull up the Balance Sheet, my Drawings transactions appear as a negative dollar amount under  Liabilities : "Long Term Liabiltities" and as a positive value under Equity : "Retained and Current Earnings.

 

Is that correct?

 

My other question is, we have an Investment Platform which I transfer money into from the business account on a weekly basis. How do I enter this transaction in MYOB??

 

Thanks again Dee Workman

DuncanS
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Re: Drawings on a P&L Report

@Madfish

 

Bronnie,

 

First step is to determine which business structure you have - a Company or a Sole Trader.

 

  A Company uses a Current Liability Account called Directors Loan.

  A Sole Trader uses a Equity Account called Equity/Drawings.

 

A Director should be paid a monthly salary by the Company based on the Company's Cash Flow and the Director's Cash Needs/Tax Position.  PAYG - W would be paid monthly or quarterly ($25000 annual threshold).

 

I have attached my GST Checklist

 

Duncan

Duncan Smith
Business Advice + Tax
Helping business owners build a better business since 1998
E duncan@businessadvicetax.com.au T 02 9904 3672 7 days

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