Dashboard Courses Money Module 1 Financial Foundations

Lesson 7 What is your profit target?

Lesson 7 What is your profit target?

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    1. Without getting into your accounts and where your accountant allocates the drawings, the answer is ‘Yes’ the drawings you take from the business are treated as your income. They might be taxed differently, but just because you own the business it doesn’t mean you can just keep drawing money out of the business tax free. Without overcomplicating the answer the drawings will probably be shown in what is usually called the ‘Shareholders loan account’ which is shown in the ‘balance sheet’ and lets say that initially the ‘shareholders loan account’ showed that you put $100,000 into getting the salon open, then technically that means that is your money that the business owes you. And as you take that money out in the form of drawings then the money the business owes you is being reduced. Once you get the shareholder loan account to $0 then if you keep taking out ‘drawings’ then YOU OWE the business that money. That is not a good place to be! Ask your accountant to show you on your P&L and Balance sheet where the ‘shareholders loan account’ is and to explain where your drawings show up.

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