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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4348
Experience:  FCCA FCMA CGMA ACIS
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I am so new to prepare income tax /2016.

Customer Question

hello, I am so new to prepare income tax for year2015/2016. My friend is running as sole trader. He wants me to organize all his transaction for year2015/2016. My questions are the following:
1) As sole trader i have to calculate all transaction between 06/04/2015 and 05/04/2016?
2) his business bank account there is some money withdraw from cash machine for his use I think. They are entitled for expenses can i deduct them from income as a wages or salary for money taken by his self.
4) his salary can we deduct from income?
3) How to put paypal transaction as expenses which expenses can i put? And also there are some other currency transactions (dollars) how to put them into software?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. 1. Yes, assuming that those dates are indeed his trading year; not all traders run their accounts to coincide with the tax year. 2. As a sole trader he is not salaried, any moneys he takes out of the business over and above that needed to defray business expenses, for which it is adviseable to have vouchers, are termed 'drawings' and are not chargeable against profits for Income Tax (IT) purposes. Drawings merely reduce the capital employed and have no effect in taxation computations. 4. No. 5. Gov UK advises that the following items are normally allowable against sales to compute a profit: 'Costs you can claim as allowable expenses These include:office costs, eg stationery or phone billstravel costs, eg fuel, parking, train or bus faresclothing expenses, eg uniformsstaff costs, eg salaries or subcontractor coststhings you buy to sell on, eg stock or raw materialsfinancial costs, eg insurance or bank chargescosts of your business premises, eg heating, lighting, business ratesadvertising or marketing, eg website costs' Thus relevant PayPal transactions can be put through, again best if supported by vouchers. Currencies should be converted to sterling using the HMRC exchange rates which can be found here: https://www.gov.uk/government/collections/exchange-rates-for-customs-and-vat before entering in the books of account under the relative ledger headings. Remember that expenditure on capital items cannot be set against sales save through the capital allowance regime. I do hope that I have been able to shed some light on your problem.