I’m running a sole proprietorship (Swedish: enskild näringsverksamhet) where I’ve got no empoyees and no salary is being paid - not even for myself. The sole proprietorship is the same juridical person as the juridical person which I, as a living man, am managing.
Withdrawals should be done instead of salary payments due to the reason above. Now, these withdrawals should not count as an expense to the company as I need to pay taxes for the profits, of which these withdrawals are part of. At the same time I wonder if it would affect the profits of next year if I simply moved the sum to a separate bank account in ERPNext. What should I do here?
You can debit the retained earning account for such withdrawals without affecting the profit.
It seems almost correct, except for the fact that whatever money I withdraw still should count as profit so that I have the correct figures for our tax office.
As the account from which you withdraw your money must be a liability or equity account, the income report will not be altered.
Think that as an owner your money withdrawals are not an expense but a decrease in your assets by way of increasing the liability (the withdrawal made).
Remember that ending of the fiscal year all profit and loss accounts need to go to 0 and the balance can be transferred to the liability account where you can make your withdrawals.
This is the basic logic at least as I understand it.
Alright, I think I got it. Thank you Malvin, I’ll give it a go!