I am no finance person and extremely confused with the Directors Loan concept. I put money into my business to pay for various fees/purchases until I start trading. I’m loaning this money to my business.
- When I import Business Account bank feed, I tag payments from my personal account to the company as "transfer between accounts and move it to “Director’s Loan Account”. This created a negative balance which I understand means that the company owes me money.
- Once this money is in my business account (not in QuickFile but in the actual bankaccount), I pay various fees. I tag these as paid from the “Director’s Loan Account”.
PROBLEM: When I do this, it’s duplicating the amount the company owes me.
- I borrow the company £20 > move it in QuickFile to DLA - company owes me £20
- I pay £20 for stationery > mark it as paid from DLA > company owes a total of £40 - which is obviously wrong.
Can anyone help me understand what is the correct way of doing this?
Thanks a lot!