Owners investment into a sole trading business

lisajayne1

The owner has invested £10k into her Self Employed business. The business is showing a profit at the year end.
£10k is still owed to the owner so sitting in the balance sheet.
Can she offset the loan against the tax liability that will arise.
Year end was April. Only just completing the accounts now.
Can I make any in-year adjustments to reflect this and reduce the liability?

MarieNoelle

No she can't. She is taxed on her profits for the year, whatever the capital introduced/drawings shown in the accounts.
If she has taken a bank loan, interests would be a deductible expense.

lisajayne1

I was just coming on here to delete this post. The information I was given was by a friend trying to quiz me for free.

The fact the money is now in there is really irrelevant as the her money was used to buy stock etc.. the profit is the profit..

The "friend" informed me there was £12k profit as there was £12k in the bank so he assumed he had made 12k profit !!!

I hear you sigh.. I am too but thank you for answering anyway.

lisajayne1

he has now given me an actual list of stock, takings, expenses etc. Would you suggest i get copies of the bank statements & or invoices to verify .. I don't want to do all the bookkeeping for this!! However I'm not sure it's best practice to produce accounts just based on his figures?? Or is it??
I appreciate your response
Kind regards

lisajayne1

He's literally written out a TB

lisajayne1

Lol I'm not doing the tax computation however yes he has listed the assists & loan & opening & closing stock.. I will get the statements as you have confirmed my thoughts for my own safeguard I can add the income & see the closing balance, I feel that will be enough to legitimise the accounts

lisajayne1

Yes correct. He has other businesses & a chartered account who prepares his personal return