Setting up required accounts for paying sole trader

Roland
Roland Member Posts: 24
edited July 2022 in Reckon Accounts (Desktop)

Hi Everyone,

I have just closed a company and have started out again as a sole trader.

I have set up a new entity in Reckon and used the simple Chart Of Accounts option during interview, (perhaps too simple) so I'm missing some basic accounts

I would like to know the correct way (accounts) to set up for paying myself, please.

I would like to use the Write Cheques and post to Drawings account. I need to know the correct name for the payee field, and what account type to create for this name.

I did notice the Transfer Funds option, in which I could use Trading Account in the From and Drawings (equity) in the To, but don't understand the impications.

I would really appreciate some help to get this set up correctly before I start taking money out of the Bank

Thanks in advance

Comments

  • Kris_Williams
    Kris_Williams Member Posts: 3,272 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert

    I would create drawings as an other expense account and you can write many things in the payee field - your name, drawings, whatever makes sense to you.

  • Roland
    Roland Member Posts: 24

    @Kris_Williams thank you, that was quick!

    Reckons says use the drawings (equity) account in COA for these payments to myself. Are you saying this incorrect, and should be an Other Account? please explain.

    Yes, I'm easily confused with accounting 😊

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,366 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited July 2022

    Reckon is correct - Drawings as a Sole Trader are NOT an expense, you need to set up an Equity-type account in your CoA for this.

    You were on the right track to start with - Create yourself as an "Other Name"-type (this allows you to run name-relevant reports & matches more accurately with what you'll see on your bank statement) & enter a Write Cheque for each drawings amount that you pay yourself.

    NB You can use Transfer but I prefer the Chq option because it allows for more detail 😊

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Roland
    Roland Member Posts: 24

    @Acctd4 , Awesome. Thank you so much for the clarification.

    @Kris_Williams, @Acctd4 Thank you both for responding to my post. Much appreciated. ☺️

  • Acctd4
    Acctd4 Accredited Partner Posts: 3,366 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited July 2022

    You’re very welcome @Roland ☺️

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)
  • Kris_Williams
    Kris_Williams Member Posts: 3,272 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert

    Yes of course Shaz is correct, I sometimes use Equity and sometimes Other Expense - depends on business and accountants requirements