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.
'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.
