I was just browsing the forum and I came across this topic
When I spoke to my accountant, he said create an expense account for salary which I have done. My company is a ltd company and I am technically a director (owner of the company). I take a monthly salary and quarterly dividends.
Is the advice for creating the salary as drawings under equity only applicable to sole traders and partnerships or is my accountant wrong in stating that my salary goes under expenses.
I am happy to have the salary under expenses because then my salary is deducted as an expense which reduces my tax bill.
I have followed my accountants advice and created a capital account under my name and renamed drawings as dividends to record all my dividends which are not expenses therefore should not appear on the income statement.
This was done under the advice of my accountant and I just want to make sure that he is correct based on the type of company that I have - a ltd company. I am reasonably certain that the advice given in the topic I have linked is only applicable to sole traders and partnerships. Is this correct?