What are drawings?
Definition of drawings
Drawings are sums of money that a sole trader or partner takes out of his or her business bank account.
Drawings can be:
- Withdrawals from your business bank account
- Transfers from your business bank account to a personal account
- A payment for a personal cost from your business's bank account.
It's the end of the tax return as we know it! Find out about HMRC’s Making Tax Digital plan and how it will affect you with our free guide.
'Personal costs' paid out of the business bank account might be:
- Contributions to your pension scheme; these go in a different part of your tax return from your business's accounts.
- Your own income tax and National Insurance payments; HMRC view these as a personal liability, rather than a business one, for sole traders and partners.
- Costs that are clearly non-business, like your weekly shop or family holiday.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.