HOW TO START (OPEN) A DIRECTORS LOAN ACCOUNT
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- Опубліковано 29 вер 2024
- Putting some money into your limited company and wondering how to open your director’s loan account?
In this video Dan runs you through the practical steps to start your loan account.
Topics include:
Directors Loan Account basics
Opening a directors loan account
Starting a directors loan account
Book-keeping a directors loan account
QuickBooks Directors Loan Account
Xero Directors Loan Account
Creating a directors loan account
..... and more!
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Author: Dan Heelan of Heelan Associates
#accounting #tax #limitedcompany
I withdrew £400 from my business account as a loan. I Created the account as you demonstrated under liabilities in the software. Now my balance sheet shows MINUS £400 under liabilities labelled as director loan. Have I done it correctly?
Sounds right, it’s in a minus because at that moment it’s an asset rather than a liability (company is owed the money back).
omg this explains everything.. i was so confused on how to add it in. i didnt know quickbooks connects to the bank, this is very helpful, thank you! so basically for the company to take a loan from you (the director) do you have to create a director loan account? and then add the funds into the directors loan account? is that how to register it as a loan so it so it doesnt look like income??
That’s basically correct yes. The directors loan account is a new category/code you create if there isn’t a default one provided in the software.
Great video. Do you do the same in the quick books if you're self employed?
It’s slightly different as you’d mark as either ‘capital introduced’ or ‘owners drawings’.
Just wondering, if I purchased my indemnity insurance using my personal credit card, how would I record/ get that back to me from my business account? I have kept the electronic invoice for my records. Sorry new to this just want to ensure I am doing this correctly
Its similar to the situation in the video.
So you would show the insurance cost as a cost to the business, and the amount you paid would be owed back to you via your directors loan account.
When you physically repay this amount back to yourself via the bank, in this simple example the company has squared you up; all clear.
Great video. If I loan my company £10k my company spends the £10k then makes £10k, can I take my £10k DL out before declaring profit, therefore net £0?
You’d still declare income, but a lot would depend on timing and what you spent cash on.
If it’s simple £10 tax deductible expenses and £10k income all in same tax Period there is likely no tax, so you could withdraw money via repay of your loan tax free.
How do I do that on just a simple excel sheet as a beginner who doesn’t want to pay for a software atm?
Treat it like a bank account. Separate tab, show each ‘in and out’ and a running balance.
I thought a Directors Loan Account was a seperate account with the bank 🤣 thanks for sharing, very useful information.
Glad it was helpful!
What if i am 100 percent owner of an s corp, but i hired a Director for the corporation. Can the Director have a loan account?
Directors can have loan accounts generally, but articles of association or other agreements might limit what can be done.
Great video. Would it work the same way if I accidentally used my personal debit card to buy inventory for the business? So currently, on the chart of accounts purchases of stock go into "Purchases", so would I transfer to the Director Loan account?
Yes! Very common use.
Your tone of voice feels like it's 1.5x speed. Good content, but could be better with a slightly lower speed :)
It’s funny I feel everyone else talks too slow 😃 glad you enjoyed and appreciate the feedback!
Hi there thanks for this video my friend and I are starting a scaffold business and are struggling to get funding so we are going to get a joint personal loan and feed the company that way. Subscribed!!
Good luck Nancy! Scaffolding done well is a decent business from our experience with clients!
Great video, I bought a property from auction recently in spv ltd company, due to the deposit of 10% needed to be paid same day I paid it using my personal account, the rest of the outstanding balance will be paid from the Ltd company account by funds from directors loan which I will transfer, how do I account for the 10% deposit as a directors loan when it never came into the company's account? Thank you for your help.
It all comes down to how you add the property in the books. If you image, when you enter the property in records, when you come to show how you paid for it you will be short the directors loan amount.
There are several ways of entering into software depending on the specifics.
You might for example key on the property as a ‘bill’ for its full value. You’d see the 90% payment in bank to allocate this against, then you’d ‘pay’ off the balance using the directors loan. Hard to describe in text!
I want to introduce funds to lend into the directors loan account at commercial interest rates. Can i transfer funds to the company and then do the admin, or do i have to do the admin before introducing funds?
Can I transfer funds to the business, and then do the admin afterwards?
In reality its almost always the case yes.
@@HeelanAssociates do you have 5 minutes to discuss Monday morning? Its a substantial amount so want to get it right. (Holding company purchasing trading company so don't have retained accountant yet)
@@MrJeffHead We wouldn't be able to advise 1-2-1 without being engaged as accountant due to the way our professional body regulations work unfortunately. If you'd like to learn more about options for support, get in touch with us and we can book a discovery call with the team to discuss
info@heelanassociates.co.uk
02392 240040
Do these softwares link in to your chosen bank account?
Xero, quickbooks and their competitors do connect to most banks yea, to get the statement data line by line.