We have sold some of our belongings to help fund a new car for the business which we have purchased.
The investment came from our personal account so I’m not sure how to put this in. I’ve been following guides on here, but I can’t tell if im right or not.
The amount I put in to the business in total - £3784.50
Car cost - £3425 (£350 deposit and £3075 on purchase)
Transport to get car cost £9.50
I’m in talks with an accountant as to what I’m eligible to claim back off of it but I would love some assistance with putting this into quickfile.
I’ve put it in as a ‘Directors Loan’ but I wouldn’t take this back off of the business.
In my opinion you have recorded the initial entry the correct way.
The Company has gained an asset in the form of a vehicle and has incurred a liability in the form of a loan (Director’s).
There will be a net asset value of nil in relation to the vehicle.
.
You mention that you don’t intend to take back the amount you’ve put in as a Director’s loan.
This could have an effect on the balance sheet in future years, because the assets lose value through depreciation, and if you don’t pay off some of the director’s loan, the company could have more liability than asset in relation to the vehicle.
Hi,
That does make sense thank you!
The vehicle was bought primarily for business use, however will be used personally alongside. So this is my issue lol.
I’m speaking to my accountant next week about it for personal advice but thanks for this!
Am I right in thinking that when you pay back the directors loan that no corporate or personal tax or NI is due on the money paid back to the director?
If the company is just paying back the capital that the director has lent it then no.
If the director has charged the company interest on their loan then it’s more complicated and you should check with your accountant - in essence, the interest is income for the director (which is taxable through self assessment) and an expense for the company (which is deductible from profits for corporation tax), and whether it’s worth doing depends on whether the income tax incurred by the director is more or less than the corporation tax saved by the company.
Because it’s a purely balance sheet transaction, not a profit or loss. Effectively you have transferred £3,784.50 from the Director’s Loan “bank account” into the company’s assets, leaving the DL showing as overdrawn - a liability of the company. When the company pays you back, if there’s no interest involved then the repayment is simply a bank transfer the other way, from the company’s bank account to your DL account to clear the liability.
The money you lent to the company wasn’t income for the company, and the repayment is not an expense.
