Forum Message

Directors loan account

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


Posted by Kevin Thornicroft on Feb 6, 2018 9:17 PM GMT

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,


Posted by Mark McLaren (Solar Accounts) on Feb 7, 2018 4:31 PM GMT

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


Posted by Kevin Thornicroft on Feb 7, 2018 5:00 PM GMT

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,


Posted by Mark McLaren (Solar Accounts) on Feb 7, 2018 5:19 PM GMT