I have a loan account under my bank accounts (let’s say is for That Company ltd)
If the account balance is -1000, does that mean that my company owes That Company ltd or is it the other way around?
Sorry, I get confused with the ins and outs.
More context, if needed: I made some transfers from That Company Ltd to This Company Ltd over the past 12 months. These were loan repayments because This Co borrowed money from That Co. However, now I’m unsure if I have overpaid, or if I still owe a grand.
I’m presuming that you’re referring to your company as This Company Ltd and the lender as That Company Ltd.
Were transfers from ThatCo to ThisCo the initial capital and extensions to the loan?
Did ThisCo make any payments to ThatCo as repayments of the loan? If it is zero interest, then all of the payment will go to reduce the loan. If it has interest, then it will be a mix of interest (that goes on your P&L) and money to reduce the loan. If it is interest only, then the amount you owe will stay static and all payments from ThisCo to ThatCo will be interest and in your P&L statement.
A positive balance on a loan account would mean that ThisCo has paid back more than the loan (and any interest) to ThatCo.
Check where the loan account appears in your Balance Sheet. If its in Current Assets, ThatCo owes ThisCo money, if its in Current Liabilities then ThisCo owes ThatCo money.
If that is the case then a negative balance, just like an overdraft will be money that your company (ThisCo) owes to the loan company (ThatCo)