Hi, I am trying to record a one off annual salary payment for myself as a director, how do I journal this correctly, the majority of this payment will be left within the directors loan account to be drawn at a later stage, many thanks
Hi Julianna,
The journal entries are as follows:
Debit Directors Salary X
Credit Bank Accounts (X-Y)
Credit Directors Loan Account Y
Where X is the total payment and Y is the amount not paid out as salary.
Hope that helps.
Kind regards,
Chris
Debit gross wages (or maybe director’s salaries) for the gross amount, debit employer’s NI as appropriate (which may be zero if you’re claiming employment allowance), credit PAYE for employee NI plus employer NI plus income tax, and credit directors loan to balance it up. This will show on the DL bank statement view as money out, reflecting the fact that you’ve essentially loaned money to your company which it uses to pay your wages.
When you do finally draw the cash out that would show as a transfer from current account to the DL account.
Many thanks both for your excellent advise that has now seen my problem solved 