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.

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'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.