Director Loan Account tag

Accounting
1

Hi
What account/ tag/ do I use when repaying (to myself) a Director’s loan? 1201 or
7002
Thanks

2

How did you record it when you gave the loan to the company in the first place?

Normally if your company owes money to you then that would be represented in QuickFile by your Director’s Loan bank account 1201 showing an overdrawn balance. Repaying the loan is therefore simply a bank transfer from your business current account to the DL account, making it less (or not at all) overdrawn.

3

Thanks Ian,
I set it up correctly. Now’s the first payment
So it’s a tranfer rather than a payment.
Makes sense now!
Cheers

4

Yeah, just think of the Director’s Loan bank account balance as representing the amount that either you owe the company (if the balance is positive) or the company owes you (if the balance is overdrawn) at any particular point in time. When you lend actual cash that’s a transfer from DL to current, when you are repaid actual cash it’s a transfer from current to DL. If you make a business purchase with personal funds, you log that purchase as being paid from the DL account instead of the current account - you’ve effectively lent the company some money with which to pay the expense.