Accounts some help please? united kingdom?
Question:
i am self employed and sell on ebay if i get a loan to buy some stock what is that classed as is it classed as an income in my year accounts? or something else can some one please help i am based in uk just need some help with my accounts
Answer:
I would say no.the loan is not classed as income.
Depending on your the way you do your accounts the loan is in fact a liability.for blancing puposes the stock you buy with the money are assets.
The difference between what you buy and sell your stock for is your income.
It's not income, it's a liability - that means it's counted as money you owe to someone else. You may even be able to claim the interest on it as a business expense.
The loan is working capital. The profits you make from sales is income.
You may have problems convincing the Inland Revenue of this fact, though. Talk to an accountant.
The loan is not income, it is a liability. And the interest you pay on it you should treat as a business expense. This will reduce your annual profit and save you tax.
Naturally keep the documents for the loan and the interest, in case you are asked for proof.
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