I have two Quickfile instances - one for my limited company and the other for my sole trader account. I want to transfer funds from my sole trader account to my limited company, so I created a loan account on the sole trader instance and added the funds received in the limited company to the director’s loan account. However, I’m not sure if this is the correct process. Should I create another loan account on the limited company side as well?
Moreover, I want to ensure that the withdrawals I make from the sole trader account are not seen as proprietor withdrawals but as an investment with money owed to me. Can you please advise if I am doing this correctly?
Money to ltd company is Director’s fund, can be subject to interest charge but then that will income for you as well for your personal tax return. Money from sole trader a/c is drawings unless a formal loan agreement is signed between your sole trader business and ltd company, assumed both are totally different trading activities
Sole trader income once taxed can be withdrawn or left on books, doe snot matter, it is not like ltd company where dividends has to be declared, since you (sole trader) and company director are one and same so loan from sole trader is same as directors funds to company, if company is paying any interest on those funds/loan then that will be your personal interest income to be shown in your SA return. If it was another company lending money to associated company then intercompany loan account would have made sense but in your current case , it is case of drawing and DCA