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Home»Sole Trader»How to pay yourself – Sole Traders have Drawings
Sole Trader

How to pay yourself – Sole Traders have Drawings

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As the owner of a self employed business you do not pay yourself a wage or take dividends. There are no formalities that need to be done when you take money out of the business nor are there any restrictions on how much you can take from the business and when. You would simply extract the money paying it from the business bank account, assuming you have one, into your personal bank account. The amount taken would be described as Drawings being the proper accounting term to use.

Drawings are not an allowable cost for tax. They will not reduce your tax bill. It’s worth noting that if you pay your self assessment tax bill out of your business account you would record that payment as Drawings. This is because your tax bill must be met out of your own pocket.

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