HELP with my small business accounts!!!!!!

lana265 Registered Posts: 17 Dedicated contributor 🌟 🐵 🌟

I have a small business which I run from home but Im having trouble balancing my accounts. August accounts balanced perfectly but I just cant seem to get September to balance. Theres a few questions I need to ask:

1) Does my drawings account need to have a BAL B/D figure at the start of the month if there is a balancing figure the previous month?
2)Do I do the same with my capital and expense account?
3) Should I be recording a gross sale amount in my sales accounts? or a net amount (sales figure minus paypal fee)
4)what is the double entry to account for a paypal fee that comes off my gross sale amount?

Any help would be greatly appreciated, its driving my insane and i just cant seem to do it. Spent a weeek trying to figure it out and looking through my Kaplan books and I still cant seem to do it.


  • CeeJaySix
    CeeJaySix Registered Posts: 645
    3 and 4 - I'm assuming you're not VAT registered and the gross/net is just of the PayPal fee.

    There are a couple of ways you could do this, but my opinion would be that your sale price (from which you deduct your PayPal fee) is the value of the sale, and the PayPal fee is a separate expense, so you shouldn't net them off. Therefore I would set up a control a/c in the balance sheet for your PayPal a/c; for sales, dr PayPal cr sales (gross). Then when you withdraw from PayPal to your bank a/c - dr bank cr PayPal (net), dr Expense (PayPal charges) cr PayPal. This would also keep your figures in line if you use existing PayPal balances to make purchases, thus avoiding some of the withdrawal fees, and will leave a true debtor/creditor balance in the balance sheet at the year end if you have a balance on the PayPal a/c.

    1 & 2 - not entirely sure what you mean. Where are your balancing figures coming from?
  • lana265
    lana265 Registered Posts: 17 Dedicated contributor 🌟 🐵 🌟
    Thank you.

    I think iv figured out 1 & 2. Thanks for answering so quickly I think youv made me realise my mistake. I was putting paypal down as a purchase not an expense. At the end of the month with my paypal expense account do i transfer the whole balance to the income statement? or do I have to find the balancing figure and write that as a BAL C/D and then bring down this figure at the start of the next month?
  • CeeJaySix
    CeeJaySix Registered Posts: 645
    Treat as per any other expense. From what you're saying I take it you're transferring everything monthly, and then at the year-end will total the 12 income statements to give the annual statutory income statement? Of course if you're only filing abbreviated accounts and don't require an annual P&L then this can be disregarded.

    Going back to 1 and 2, if I've guessed right then you should always have a balance c/d for all items in the balance sheet (unless of course the a/c balance is zero) - so your drawings and capital should always carry forward, including over year-end. Remember your balance sheet is a snap-shot of a moment in time; your income statement shows what you've made over a period, and the total of that is transferred into the balance sheet.
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