What happens if I take drawings from the business? Does it reduce profits & tax?
Answer:
a) It reduces the bank balance and the amount the business owes you.
b) No - it does not reduce profit or tax
Director withdraws $10,000
|
BS / PL |
Before |
Adjustment |
After |
|
|
Bank |
BS |
40,000 |
-10,000 |
30,000 |
|
Loan owing to Director |
BS |
25,000 |
-10,000 |
15,000 |
There is no change to the PL
There is no change to the PL
There is no change to Tax