I am quite new to accounting for small LTD and I got few questions at the beginning:
How can I add all purchases and finances before I have first earnings and even bank account? This covers payment for establishing a company (paid by private card) or some small cash spent on first purchases.
What exactly is „petty cash” – is it some kind of separate wallet only with cash for small spendings? And I can pay for this for coffes/magazines, right?
Any purchases that you have made from personal expenses on behalf of a limited company need to be paid from the Directors’ Loan Account. This is a simple account to show money owed to the directors from the company or vice versa.
It’s like a virtual bank account to track cash in the company. If you withdrew £100 from your Limited company account and put it in a safe for odds and ends this would be reflected in your accounting system as a transfer from the company account to petty cash.
And the next question – as far as I understood DLA is some kind of “private” account connected with company. So, if I can buy something with my private cash, how can I return back money to my private wallet?
The payment method is not important, but the paid from account should be “Directors Loan”, as it is in your example. When it comes to reimbursing yourself from the company, what you can do is withdraw the cash from your limited company account or transfer directly to your personal account. In Quick File you then locate this transaction on the bank and tag it as a transfer to the Directors Loan Account. This balances out the previous debit on the DLA when you initially bought the items.