Expenses paid by director (the comapny owner)

Expenses paid by director (the comapny owner)

Didn't find your answer?

I've just started working for a new company. The previous bookkeeper has been posting all business expenses paid by the owner with his private card/cash in the same way as supplier invoices. She set up a supplier account for the owner and posted the expenses there. Is this the right way to do it?

I would normally post a journal for these:

DR Expense Account

Dr Purchase Tax Control Account

CR Director's Loan Account

Can you please confirm if posting these expenses through the supplier ledger is the right way? If it is then I would just continue doing the same.

I would appreciate your help.

Thank you.

Replies (2)

Please login or register to join the discussion.

By Howard Marks
28th Nov 2015 13:56

More than one way to skin a cat

Does it really matter?  

So long as the expense ends up in the P&L, the correct amount of VAT is reclaimed and there's a mechanism in place that ensure the director knows he/she is owed the money back I don't think anybody cares - different software will handle it in different ways.

Thanks (1)
By turchyna582
28th Nov 2015 16:49

buying asset and settlenet of vendor's debt

Client is buying an asset (20,000 +vat), on which vendor still owes 10,000.  Vendor wishes to issue invoice for £10,000 + vat and requests the Client settle the vendor's debt with Lender.  Whilst the Client is concerned about ensuring the debt is paid....should the client insist on an Invoice for £20000 + vat ?

VAT implications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Thanks (0)