Directors loans

Sorry if this has been asked but I’ve searched and searched to no avail.

I’m in my first year as an Ltd co and earlier in the year I transferred some of my own cash (about £800) into the Ltd co bank account to help with initial cash flow. i.e., I loaned my Ltd £800 quid interest free.

I recorded that by debiting the directors loan account and crediting the current account. So other than effectively a transfer between bank accounts there no other tagging / categorising of the cash I loaned the business. Therefore I think I’ve missed a step.

Usually when i pay for things on personal card for the business I create an purchase with supplier (e.g. some stationary from Amazon) and tag/categorise accordingly.

It’s driving mad that this £800 as seeming appeared from thin air. I assuming I’ve just missed a simple step.

I’m trying to do as much of my own bookkeeping as I can a small entity before handing it off to an accountant for them to check my work to reduce my costs.

Hello @PJW_Digital

@QFMathew gives a good explanation in the thread below

It’s driving mad that this £800 as seeming appeared from thin air. I assuming I’ve just missed a simple step.

The money came from the directors loan account into the current account.

The business owes the Director.

Ok I brilliant I understand - so the next logical question is how QuickFile includes the repayments back to me in the p&l so the business isn’t liable for tax.
Or is it that repayment back to directors are an after tax item not a before tax.

Hello @PJW_Digital

Its just a balance sheet item, No tax is involved.

Repayments of the loan principal (the original £800) aren’t an expense for the company, they’re simply a transfer back the other way to counter the DL->current account transfer you made for the original loan.

If you charged the company interest on the loan (so it was paying you back more than the £800 you originally lent) then that interest would be a P&L expense, but the original lump sum is purely a balance sheet thing.

Yeah perfect - that makes complete sense.

And sadly I should have known that having worked on banking for 20 odd years in a previous life.

I know what I’m doing now.

Thank you all

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