Loan to Company

Say I loan my company £10,000 from my own personal current account…then a month later I repay myself, how do I account for this using the system correctly ?

Hi @Blackwood

The money coming into the company would be tagged as a bank transfer from the Director’s Loan Account.

When this money is repaid to you, you tag it the other way around - the money out transaction tagged as a transfer to the loan account.

This would then show the liability on your balance sheet too.

Hope that helps!

I created an account called MD personal account and transferred from there so I may have done it the wrong way, this account now shows a positive balance for the original loan amount …

Is this correct?

I can revert things and use the directors account instead ?

It does sound like it’s the wrong way around. You should see a money out transaction on the loan account, and a money in one for the business account. So the business bank balance increases by £10,000; the loan account decreases by £10,000, and if it was empty to begin with, the balance should be -£10,000.

Unless you have multiple directors, I would try and use the existing loan account if possible so you don’t end up with multiple empty bank accounts.

You can move the transaction if needed (using the bulk recoding tool). Or, if it’s just the one transaction, you can delete it and re-enter it.

I basically had payment into my business account, so I created a loan account and transferred this between accounts, then then when I repaid it to myself I did a transfer back… so it now shows the amount as a positive balance on the load account I created?

If this is not the correct way to do it how do I untag and remove from my chart of account ?

When you made the loan it should have put a negative balance on the loan account, and when you paid back it should have returned to zero. If there’s a balance left on the account then it means the company paid back more than it borrowed - was that intentional, i.e. did you charge the company interest?

Edit: you mention the “chart of accounts”, in which case it may simply be that you’re looking at the wrong date window. The CoA doesn’t show balances, it shows net movement of funds between accounts in the period you’ve chosen. If you made the loan in one accounting year and repaid it in another then on the CoA for one year it’ll show as a credit and in the other year as a debit. If you look at the trial balance instead of the CoA you should see the correct zero balance in the right hand column.

This topic was automatically closed after 7 days. New replies are no longer allowed.