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The Private use schedule calculates the private, non-business element of an expense or asset that is shared between the business and a sole trader or partner, for example a vehicle, a telephone, or use of home. It then posts a one-click journal that moves the private-use amount out of the profit and loss account and into the proprietor's drawings, or into each partner's drawings.

Table of contents 

When should I use this template?

Add this reconciliation on an Unincorporated file (sole trader or partnership) wherever an account in the trial balance includes an element of personal, non-business use that needs to be identified and adjusted out. A common example is a motor expenses account that also covers a partner's private mileage.

It is not relevant to Limited company or LLP workflows, since only individuals, not companies, have private use of business assets.

Before you start

  • If the file has partners, complete the Partners template first, so that partner names are available to this schedule. If the Partner current accounts reconciliation has a specific partner order configured, that same order is used here instead of the default list order.
  • Have to hand, for each account with a private element, the amount before private use and the percentage of that amount that relates to private use.

Background

Where a sole trader or partner uses a business asset or incurs a business expense partly for their own benefit, the personal element is not a genuine business cost. It needs to be separated out of the accounts and recorded as drawings instead. This schedule calculates that split account by account, and partner by partner where relevant, rather than requiring it to be worked out and journalled by hand each year.

Steps

  1. Add a row for each account with a private element. Pull in the account using the nominal code selector. Only one account can be selected per row, and a warning appears if more than one is chosen. Add further rows if a balance needs splitting across more than one account.
  2. Enter a description. This defaults to the account name and is also used as the description on the posted journal.
  3. Enter the amount before private use. This defaults to the account's value, but you can override it if the figure to apply the private proportion to should differ from the account balance.
  4. Enter the private proportion, as a percentage. The private-use amount for the row is then calculated automatically (amount before private use × private proportion).
  5. Where the file has partners, allocate each partner's share of that row's private-use amount in the columns provided: one column per active partner, plus a Total column. A partner who left before the start of the year is excluded. Each row's total per-partner allocation is compared to the calculated private-use amount, and an unreconciled indicator is shown if the two do not agree.
  6. Attach supporting documentation to a row if needed. The file column only appears once at least one row has a file attached.
  7. Review the grand total row at the foot of the table, then use Post Journal to raise the adjustment. This credits the private-use amount out of each selected account and posts it as drawings, split across each partner's drawings account by the amounts entered, or to a single drawings account for a sole trader.

What flows through to the rest of the accounts/workflow?

The posted adjustment reduces each selected account by its private-use element, so only the genuine business cost remains in the profit and loss account. It also increases the drawings recorded for the proprietor or for each partner, which then feeds through to their current or capital account reconciliation.

What rolls forward next year?

The accounts selected and their descriptions carry forward as normal. The amount before private use, the private proportion, and any supporting document are reset to blank at the start of each new year and need to be re-entered or re-attached, since these figures typically change annually.

Where the data comes from

Account balances and nominal codes come from the trial balance. Partner names, and the order they are shown in, come from the Partners template, or, where the Partner current accounts reconciliation has a specific order configured, from that order instead.

Frequently asked questions

Why can I only select one account per row?

To keep each row's private-use calculation clear-cut. If a balance needs splitting across several accounts, add a separate row for each.

Why does the layout switch to a landscape page?

This happens automatically once there are more than five active partners on the file, so that all the partner columns fit.

Why is a row showing as unreconciled?

The amounts entered across the partner columns for that row do not add up to the calculated private-use amount. Check each partner's entry against the row's private-use figure.

What happens on a sole trader file with no partners?

The partner columns do not appear at all. Posting the journal sends the private-use drawings to a single proprietor drawings account instead.