Payments coming out of business account

[Mr Pancamo]

Hi Guys

Just a quick query to find out people's experience on this...

At the moment, any business related items I buy come from my personal account (where I pay from my credit card, paypal etc) and i claim these as expenses.

Is it a good idea to have these coming straight out of my business account, or just more hassle? I'm thinking of setting up a Paypal from the business account, and also applying for a debit card of sorts so that any business expenditure can be paid directly from there.

However, friends I know say it's better to keep doing it from the personal so that you can keep the two different, but surely the point is to keep business expenditure away from your personal account?

Opinions?

Cheers

[Bluebird]

The problem with expenses being reimbursed from your personal a/c is you have to fill out a P11D and submit to HMRC with all of these on.

If you just do it from your Business Account, then it just gets deducted from your profit.

[howdydoody]

Clarification

Bluebird is exactly right, but I would like to illustrate the point about the P11D.

If you pay the expenses yourself and reclaim, then these amounts go on your P11D, and if they are large amounts they could attract attention. As legitimate business expenses there should be no problem however.

If you pay by company credit card or cheque then they go straight into the books on the expense line and do not have to be declared on your P11D.

Take the example where you pay yourself say £10k per year and the rest in dividends, and your expenses are say £1000 per month.

If you pay the expenses yourself, then your expense reimbursements will be greater than your salary, whereas if you pay the expenses via your company bank account or credit card then your expenses on your P11D are less.

To me, it makes more sense to use a company account, and I feel it adds some credence to the costs as business expenses.

HTH.

[philip@wellwoodhoyle]

Or you apply for a dispensation that you don't have to put the recharged expenses on your P11d nor personal tax return, and if you don't have any benefits in kind, you wouldn't even have a P11d to complete at all.

[Bluebird]

In this area you have to think like the business that you are, ask yourself if you were a permie would you or the company pay for the item ?


A take away for late working or a taxi to travel to another site ? Personal Payment and reclaim.

A laptop or software ? The company pays and gives it to you to do your job.

It's a lot easier when you thinkof it that way.

[Mr Pancamo]

Cool, thanks guys.