How to withdraw funds from your organisation – Drawings
This month’s theme for MJB Avanti is How To Withdraw Funds From Your Organisation and this week we will cover Drawings
Drawings are a way for sole traders and partners (the owners of the business) to withdraw money.
The main thing to remember is that when you take drawings, these do NOT reduce your profit for tax.
So, for example if you have £5,000 profit, you withdraw £5,000 drawings – you will still have £5000 taxable profit.
Unlike a limited company you can take drawings whether you are in profit or not – however you must still be seen to be trading ethically – ie that the business can afford to make the payment and not paying yourself before honouring your debts.
If you have employees they are covered via the PAYE system and that is tax deductible it is only the owners of a sole trader or partnership that take drawings.
If you know someone that needs help with their personal tax return and declaring the correct profits and utilising the allowances available please ask them to contact us.