Hi - I’m a newbie and almost getting the majority of things. Used basic quickbooks for years so have reasonable accounting knowledge. Used to finalise our accounts manually being as quickbooks was always difficult to understand and the help was useless.
OK. I’m trying to now finalise our partnership accounts for 2018/19 and almost there.
We moved location a couple of years ago which was very costly. This resulted in the business owing us approx. £25000. I am attempting to show this amount in a Partners Loan Account (our own money that we will recoup eventually and not from an actual loan). I need to enter this in a journal but can’t work out the D/Cr codes or which way round?
Any help much appreciated>
PS Quickfile has to be the easiest accounting software I’ve ever used, very impressed - just need the time to really learn it all.
I’d check with an accountant to be sure but I’d have thought that money “lent” by a partner to the partnership isn’t really a loan as such (since there’s no legal separation between the partners and the business and you can’t lend money to yourself). As such I’d think it needs to be considered as capital introduced rather than as a loan liability, and the “repayments” will just be in terms of you taking more out in drawings over the next few years.
With my partnership business what I’ve set up in QuickFile is three nominals per partner under the capital and reserves section for that partner’s capital introduced, drawings taken, and share of the profits. Each year end I split the partnership net profit between the profit share accounts as per our partnership tax return, and clear each partner’s drawings bank account down to their drawings taken nominal. The sum of a partner’s three nominals in QuickFile then matches their “current account” figure in the accounts as prepared by our accountant (capital introduced plus profit share minus drawings taken).
Thank you Ian, much appreciated. Will study what you have explained and should be able to grasp this.
At least with quickfile if you make a mistake it is easy to rectify. QuickBooks was a nightmare to fix.
Thanks. Again.
It can just go into a drawings account as a negative amount. We use this for our pottery. When we were setting up, we basically just used the drawings account like a bank account, where we paid for things out of it that came out of our personal accounts, and when cash comes in that we are holding on to, it reduces the negative balance on the account. It shows on the balance sheet as a liability (being that the partnership owes us the money.
Except that it isn’t really a liability since you can’t owe money to yourself. If it’s something that’s going to take several years to “pay off” you’d be better isolating it as capital introduced so it shows in the correct section (capital rather than liabilities).
thanks to you both, very helpful.
my mistake 1 - didn’t input the ‘loan’ as a negative in opening balances. will now remove this altogether as suggested.
remedy - enter as capital introduced and proceed using the drawings account
makes sense
thanks again