HI
Just setting up a new (small) limited company and using my own money to pay for some startup costs eg companies house registration. This is the process so far..
Money paid out
Paid to - Companies House
Amount - £12
Paid from Account - Directors Loan Account
Allocated to - Accounting, Legal and Professional Services
Money Received
Received from - Me
Amount - £12
Deposit into Account - Directors Loan Account
Received from Account - Directors Loan Account, which seems wrong but it does make the directors loan account have a liability of £12 which sounds correct.
Am I using the Directors Loan account properly?
Kind Regards
Kevin
Hi Kevin,
Your first transaction is correct - it records the payment to companies house and increases the Directors Loan Account liability by £12.
The second transaction is not correct - it takes money out of the Directors Loan Account the puts it straight back into the same account, therefore having no effect.
Later, when the company pays you back create a General Transaction from the Cheque Account to the Directors Loan Account. (Note that from the company's point of view, this is exactly the same treatment as paying off a bank loan)
Regards,
Hi Mark, thanks for the reply. Are you saying don't make the second transaction at all, just wait until I repay the amount back to me?
regards
Kevin
Hi Kevin,
Yes that's right - don't make the second transaction and wait until the company repays you to record the General Transaction.
Regards,