how do i categorise wages?

Hi there, @cpnll. To ensure your records are accurate for HMRC, are you categorising money you’ve drawn for yourself, or are you paying external staff and subcontractors?

In QuickBooks Online Sole Trader (QBST) Plus, payments to yourself are non-tax-deductible, so you’ll need to categorise these under Equity using Partner Distributions or Owner's Equity. For staff on payroll, use the Payroll Expenses category to accurately track labour costs. If you are paying freelancers, the Cost of Labour is the most appropriate expense type.

Since miscategorising these can impact your tax bill, I highly recommend consulting with a certified accountant to ensure your books remain compliant. If you need a hand finding one, you can browse our Resource Center.

Let me know if you have any other questions about categorising your transactions or navigating QuickBooks. We are always here to help.