Hi all - thanks in advance for your help - total newbie to running a business and accountancy here!
I’m having trouble getting my head around how to enter purchases and loans into the Director’s Loan account - I can’t seem to get the figures to balance! I am not the Director of the company, but am the sole shareholder
A short timeline to explain the situation:
August 2020 - I started purchasing a number of items for the company (some capital assets and some other expenditure)
December 2020 - Company was incorporated and business bank accounts set up
December 2020 - I paid an amount into the business account from my personal account as a Director’s Loan
December 2020 - The company Director made a purchase on behalf of the company from his personal account
I am totally lost as to how to enter these payments on QuickFile - one lump sum of a loan? Separate entries for each transaction? How do I differentiate between my payments and the company director’s payments? How do I show them as Director’s Loans without it then showing my current account as being in the red?
With thanks in advance for any help or advice people might be able to give!
You may find that this article helps: Limited Company Bookkeeping - The Basics
You can set up a Directors Loan account for however many people you need, so you would want to keep your payments and the directors separate
Thanks @QFBeth - I’ll have a look through the article and give it a go!
“August 2020 - I started purchasing a number of items for the company (some capital assets and some other expenditure)”
Not if the company was incorporated in December 2020 you didnt.
The company didn’t exist prior to December 2020 so you can not have purchased items for it.
What you did was purchase items personally that would subsequently be sold to the company on incorporation.
Whether those items have depreciated in those months or whether they were sold at original value I can’t comment, but either way you need to record said transaction somehow.
You need to create purchases for each item in your own name to show you’ve sold them to the company, you can record payment to the DLA if you wish. But what you can’t do is include the original purchase invoices as an expense of the company.
With regards to the original transactions, how can they be in the red if the transaction didn’t happen through the business bank account in the first place? Remove the bank transactions if youve created it from marking a purchase as paid
Thanks Paul - that makes sense for capital expenditure on equipment etc. - but what about for payments I’ve made personally for training? How do I ‘sell’ that to the company?
You can record payment again to the DLA that would then mean it’s owed back to you.
But with training what’s allowable is a different question.
If there training is to brush up existing skills that’s fine, but if it’s to learn a new skill it’s not an allowable expense.
OK thanks - so for a bit more detail my business provides Voiceover services. I am the voiceover artist, and the training is all for the skills needed to provide that service. In that sense it is entirely related to the business…Does that make sense?
Really appreciate your time!
Only you can make that call.
Let me put it to you this way. We’re you already doing voice over work prior to the company or was the company set up to allow you to become a voice over artist. That should give you your answer.
Ok thanks - The company was set up to allow me to become a voice over artist, so in that sense it is all to the advantage of the company.
That’s not how it works in law though. Your looking at it as a benefit to the company, I’m explaining the rules surrounding what’s an allowable deduction. It’s not about a benefit to the company, it’s about a benefit to you. Obtaining a new skill is your benefit, when the company ceases you retain that benefit.
If you set up the company to become a voice over artist then the training is not an allowable expense.
If you paid for training from the business Bank account record the payment directly to the DLA. If you paid for it prior to December 2020 out of your own money, do not record it at all.
Ok - got it now I think! Thanks Paul!
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