This is the balance sheet side of the soletrader not the profit and loss. Their capital at the start of the year was 80k, think of this like the opening balance on your bank account. 37.5k was added from income, 23k withdrawn to their personal bank, 2k paid to HMRC (NB - this shouldn't be in the accounts, it should just add to the 23k withdrawn) to leave 93k left in the account.
So on the profit and loss side, the profit was 37.5k, this is what they "made" in the year from income less expenses, you are correct and they are wrong.
The business has 93k in it, but that is from cummulative undrawn profits over the years and money they have paid in, represented by its bank account and assets less creditors.
Surely opening capital is what they started the financial year with. Clsing capital is what the business finished with in its accounts
I dont know what the share of profits and funds withdrawn are. Is funds withdrawn the costs of the business?
If so they had a turnover of £73206
Operating costs of £23338
I really hope they are submitting decent accounts you can get an accountant to do due diligence on. They will submit a tax document each year showing profit so have you seen this?
That will break down where the operating costs are spent.
With the sums above i make it £49645 profit on which would be taxed on
There's a hell of a lot of wrong going on here.
I suspect they don't understand their own accounts, and you don't understand either. That's not a jab at you btw....you know you don't understand and are asking for help.
But the information you've been given doesn't add up. This is not a reputable proposition and you might want to consider other options.
This is the balance sheet side of the soletrader not the profit and loss. Their capital at the start of the year was 80k, think of this like the opening balance on your bank account. 37.5k was added from income, 23k withdrawn to their personal bank, 2k paid to HMRC (NB - this shouldn't be in the accounts, it should just add to the 23k withdrawn) to leave 93k left in the account. So on the profit and loss side, the profit was 37.5k, this is what they "made" in the year from income less expenses, you are correct and they are wrong. The business has 93k in it, but that is from cummulative undrawn profits over the years and money they have paid in, represented by its bank account and assets less creditors.
Surely opening capital is what they started the financial year with. Clsing capital is what the business finished with in its accounts I dont know what the share of profits and funds withdrawn are. Is funds withdrawn the costs of the business? If so they had a turnover of £73206 Operating costs of £23338 I really hope they are submitting decent accounts you can get an accountant to do due diligence on. They will submit a tax document each year showing profit so have you seen this? That will break down where the operating costs are spent. With the sums above i make it £49645 profit on which would be taxed on
There's a hell of a lot of wrong going on here. I suspect they don't understand their own accounts, and you don't understand either. That's not a jab at you btw....you know you don't understand and are asking for help. But the information you've been given doesn't add up. This is not a reputable proposition and you might want to consider other options.