Claiming for hours worked?

[Curious Cat]

I registered my business at the end of Jan last year so filled in my first self assessment for the period up to April. At the time I included raw materials, fairs etc as expenses. I only had one or two fairs in the period to put as income.

Since completing that I realised that I should be doing my mileage too, so I've been doing that since

Following on from this several people have advised that I should also be accounting for my working hours and adding this as an expense.

I've been noting down the hours I spend making and also the hours I spend at fairs but I haven't been physically drawing a wage. Can anyone confirm if I should be including these working hours as an expense?
I don't want to put them on the next assessment and later find it's wrong. I suppose following on from that if you do draw a wage how do you differentiate this on your accounts? (not that this is likely to happen anytime soon!!)

Any help gratefully received!!

cj

[iBeads]

As you are self employed, there is no need to record your hours. The hours you work are not an expense (unless you employ someone else and pay them, in which case the amount you pay them is an expense).

If you want to take any money from the business for your personal use, you can do this once you have made a profit, and you will pay tax on this.

Have you thought of going along to one of the HMRC courses, as they explain everything and are very helpful? I understand these may be reducing or stopping in the next financial year owing to cuts at HMRC, so if you can, try to get in soon. I suggest you bring a bottle of water or something to drink, as they have stopped providing tea/coffee.

Anne

[Curious Cat]

Hi Anne, thank you for taking the time to respond. There is so much conflicting information around!! I had considered the HMRC course but hadn't got around to looking in to it. I think I'm ok on most things it was just the hours part I found confusing.

cj

[Daesul]

I would recommend the HMRC course, even if you think you're OK with it all. I went ane they were very helpful and friendly, and there was printed info to take home which was helpful when I came to do my return.

[AliCat]

Hi CJ

My DH & I both use an accountant for our self employed returns (I know, an added expense - but it is claimed on the return!) and in all the extra allowances they know about and include for us, they have never asked about or included working hours so I am pretty certain they should not be included.

[Curious Cat]

Thanks everyone. I have to say I didn't think it was right to include the hours, I've been noting them down just in case with the intention of getting a definative answer before April. I will look into the course too.

Thanks :)

[AliCat]

One thing that noted your hours is useful for is to see how much you are 'earning' per hour (for your own information) over the course of a week, month, year, whatever you feel like. It can be helpful (and thoroughly depressing sometimes!) to see how much you are bringing in compared to the amount of time you are putting in.

Mind you, if you are anything like me, the pure enjoyment of it all is almost priceless!!

[Curious Cat]

One thing that noted your hours is useful for is to see how much you are 'earning' per hour (for your own information) over the course of a week, month, year, whatever you feel like. It can be helpful (and thoroughly depressing sometimes!) to see how much you are bringing in compared to the amount of time you are putting in.

Mind you, if you are anything like me, the pure enjoyment of it all is almost priceless!!

Trust me it's on the depressing side!! My running accounts look much better now I've just wiped the hours off it!!

[Nikkii]

I don't have any answers but wanted to subscribe to the thread because I am in a similar position to you . Started business in October and I haven't got a clue about all this stuff....just give me a paintbrush ...so finding the info really helpful. Thanks for letting me eavesdrop !

Good luck in 2011.

Nikkii

[Curious Cat]

I don't have any answers but wanted to subscribe to the thread because I am in a similar position to you . Started business in October and I haven't got a clue about all this stuff....just give me a paintbrush ...so finding the info really helpful. Thanks for letting me eavesdrop !

Good luck in 2011.

Nikkii

You're welcome, thats the great thing about this forum. One person asks a question and lots of us benefit from the answers :)

cj

[jencel]

Just wanted to confirm what the others have said. You don't need to record your hours worked, and you can't claim for the amount you pay yourself. It's the profit that determines the tax you pay, and of course it's your profit that gives you your wages, but it's (unfortunately !) not an allowable expense. In fact, I've just got my accounts back from my accountant, and my drawings aren't even listed on them.

[0103media]

Self employed = you make the profit OR loss.
Limited Company = the company makes the profit OR loss.

Drawings don't really exist.. most self employed pay money in and out of 1 account "drawings" would have to come from a biz account..