Dear Solar
I have a couple of similar questions relating to credit cards/loans;
I have a number of personal credit cards I used initially for setting up the business and business expenses but are no longer used . These are being paid off monthly via a direct debit tfrom the business bank account. Do I record the interest accrued as an expense to the credit card account and the repayment from the business cheque account as a transfer.
Similarily for our business mortgage would I record the intrerest that accrues each month as an expense to the business paid from a separate 'loan account' and the repayment (capital and interest) as a transfer from the business cheque account to the loan account or do I need to separate out the money going out of the cheque account into capital and interest as well?
Thanks
Hello J Newton,
Yes, you can record the interest expense and credit card repayment as you describe.
If you are VAT-registered then I believe you are supposed to include the interest charges in Box 7 of your VAT return. In this case you would need to record two separate transactions:
1. The principal repayment as described at the bottom of this page:
http://www.solaraccounts.co.uk/help/how-to-record-a-bank-loan-and-repayments.php
2. The interest expense as described on this page:
http://www.solaraccounts.co.uk/help/how-to-record-bank-fees-or-interest-charges.php
However, if you are not VAT-registered then it would be fine to record a single transaction with the 'to account' split between the loan and interest charges.
Regards,
