directors loan account - proof of payment needed?

directors loan account - proof of payment needed?

Didn't find your answer?

several company invoices have been paid by the director personally on set up of a company. Do I need to see proof that he has made the payments? ie receipts with card numbers on or bank statements before they can be posted to the directors loan account?

Replies (4)

Please login or register to join the discussion.

By johngroganjga
07th Sep 2014 07:18

Not unless you are auditing the accounts. But it would be as well to obtain his confirmation of what he has paid in writing.

Thanks (0)
avatar
By Beale Sahi
07th Sep 2014 22:05

Not necessary

Its not necessary because it could be possible that director didn't have company bank account initially so expenses were paid by personal means.

Thanks (0)
Replying to WhichTyler:
By johngroganjga
07th Sep 2014 22:56

Necessary

Beale Sahi wrote:

Its not necessary because it could be possible that director didn't have company bank account initially so expenses were paid by personal means.

We agree that it is not necessary, but I do not agree with the reason you put. If the accounts were being audited it would be necessary (assuming the sums were material) even if it was possible, or it was in fact the case, that no company bank account had been opened.

Thanks (0)
Stepurhan
By stepurhan
08th Sep 2014 09:09

Proof paid

It would be advisable to have proof that the expense has actually been incurred and paid, such as purchase invoices. Confirmation in writing by the director is not ideal, but would be enough for most normal accounting purposes.  If you are happy with that, then you do not necessarily need proof that the director has paid them. If they are not paid from the company bank account (possibly because it did not exist at the time) then they must have been paid by other means. The director paying them himself is the most logical explanation. There is no need to go searching for loans from other parties to cover these items.

 

Thanks (0)