Because I am a new startup business I have been paying some of my subscription fees from my personal bank account.
I have therefore added an account on Quickfile called personal account and recorded all of the payments made from there.
As a result, this is showing as a negative bank balance which then has an impact on my trial balance etc.
I was wondering if there was a better way to do this? and what I should do to sort it?
Any help would be much appreciated
Hi Paul87,
I found this in another article, may it is of any help
To answer your question, you need to set up a Director’s Loan account for you.
Purchases you make from private funds will be paid from the relevant director’s loan account, which will then mean the company owes you money. When the company starts making profits you can take money back out of the business to repay the directors loan with no tax implications - as long as you leave enough money in the company to cover the corporation tax liabilities and other bills. (Just make sure you don’t end up with the directors loan in credit as it means you owe the company money, and there are some serious tax implications for this if you let it go on too long).
@rhc Thanks a lot. Means Ill need to transfer the payments to a different nominal code.
Some homework for tonight lol
The above is assuming your a Ltd company.
If your self employed there won’t be a director’s Loan Account so don’t create one. Instead mark them as paid from proprietors drawings account. If you decide to withdraw the amount the business owes you from the things you paid personally. Again tag that transaction as proprietors drawings account.
If you are indeed a Ltd company the above applies but instead you use the directors loan account nominal instead.
Either way, don’t add those payments to a seperate bank account. You need to pay for the purchases via one of those nominals instead.