Directors Loan - book-keeping question

emv

Hi

I've just got a business bank account set up & will be transferring a few £000 from my personal account to start up my business. This will be a Director's Loan. I have already incurred a few hundred pounds worth of allowable expenses and I wonder if the best way of dealing with this is to write a cheque from the business account for the total and then to itemise the expenses across headings in my cashbook. I have all of the receipts which I'll give to an accountant but wondered if this is the best way to deal with the issue.

Many thanks

Emmavix

lavidaloca

Yes that is exactly what I would do.

heleen

Agree - that is what I would do too.
(Just in case you didnt' want to trust just one opinion )

Timmne

Just as a third bit of advice I would aim for the same result but do it in two separate transactions:

1. Debit the expenses and credit the director's loan account, and fill in an expense claim form. This is so that there is no P11d issue - you're simply (and clearly) claiming back expenses you're due.
2. Debit the director's loan account and credit the bank (write a cheque to yourself)

Is it a limited company you're running? If so, you really should get an accountant involved now and not wait until your year end - we provide advice that really does make a difference. Don't worry, I'm not touting - my advice is all free and in true MSE style!

Did you know for example about the tax benefits of a salary and dividends split?

PM me if you need any more advice; it's all free remember!

longforgotten

Timmne a good point, but debits and credits a bit high-tech for someone with a cashbook don't you think.

Sounds more likely that his accountant puts his accounts together.

I'd stick with lavidloca and make sure you point out what you've done to your accountant.

Timmne

On the contrary! I would say if it's too high tech then an accountant should be doing the bookkeeping not the OP....

A Ltd co isn't just another way of being a sole trader where mistakes in the bookkeeping can be rectified years later, it's a much more elaborate deal and has so many things to consider - someone with cashbook standard bookkeeping knowledge really shouldn't be managing the finances.

longforgotten

A Ltd co isn't just another way of being a sole trader where mistakes in the bookkeeping can be rectified years later, it's a much more elaborate deal and has so many things to consider - someone with cashbook standard bookkeeping knowledge really shouldn't be managing the finances

.

I agree with you in an ideal world. Such a high number of small sole traders are becoming limited companies and doing the books the same way as ever they did. Debits and credits are a mystery to the majority of them !