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Business Purchases as Director's Loan?

I'm trying to figure out whether to put business purchases as a Director's Loan or not.

Didn't find your answer?

So, I've just started out as a Bookkeeper while I'm finishing my AAT studies after doing the books for a few friends' businesses. I operate through a limited company (registered for VAT) 

While starting up, I've been self-funding business purchases out of my own pocket and obvs claiming VAT on my monthly return. Until the time arises that I generate enough money to repay myself these "expenses" would I be right in placing the purchases into the "Director's Loan Account" for the time being and include the VAT etc. 

Initially, I've been making purchases from my personal credit/debit cards because Lloyds wouldn't issue a debit card until the account was being used which makes purchasing difficult. * rolls eyes * 

Replies (23)

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Oaklea
By Chris.Mann
22nd Dec 2018 09:39

"So, I've just started out as a Bookkeeper while I'm finishing my AAT studies"

Do you have a an AAT licence, which enables you to carry out these services, while you're finishing your studies?

If not and, you persist with this route, you risk damaging your career, even before it's started.

Your enqury would then become academic.

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Replying to Chris.Mann:
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By BoxFive
23rd Dec 2018 18:05

Chris.Mann wrote:

"So, I've just started out as a Bookkeeper while I'm finishing my AAT studies"

Do you have a an AAT licence, which enables you to carry out these services, while you're finishing your studies?

If not and, you persist with this route, you risk damaging your career, even before it's started.

Your enqury would then become academic.

I am indeed able to carry out bookkeeping services.

Probably 'Ground Zero' in terms of things to get out of the way before you start...

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RLI
By lionofludesch
22nd Dec 2018 10:02

You're a bookkeeper and you're on here asking us how to keep books ?

Just trying to establish the facts, like.......

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By Accounting-rookie
22nd Dec 2018 10:07

It's basic double entry.
Dr P&L expense
CR DLA

Where is your credit entry going now or do I assume you are using a spreadsheet rather than software? Or are you showing a personal bank account/credit card in the company accounts?

Reclaim the Vat as normal (is your turnover really that much though to be registered- considering the level of this question!)

When the company repays you later- CR company bank account, DR DLA.

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By andy.partridge
22nd Dec 2018 14:39

Either you’re not taking time to think this simple issue through or you are not quite good enough to do the job.

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paddle steamer
By DJKL
22nd Dec 2018 16:04

Shame on you all- the OP maybe has to work in a room with no windows, that can often throw out one's debits and credits ( In such a scenario pieces of different colour wool tied to each thumb can help)

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Replying to DJKL:
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By andy.partridge
22nd Dec 2018 16:11

Or nail varnish. Works for me.

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Replying to andy.partridge:
paddle steamer
By DJKL
22nd Dec 2018 17:11

Very fetching I am sure:- if you use different colours for each finger can also double as a sort of abacus.

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Replying to DJKL:
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By andy.partridge
22nd Dec 2018 18:59

Just hoping someone’s got me a gift voucher for a tattoo parlour. Could transform my career.

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Replying to andy.partridge:
paddle steamer
By DJKL
22nd Dec 2018 18:36

Duplicate

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blue sheep
By Nigel Henshaw
22nd Dec 2018 20:36

Ignore all the usual unhelpful, arrogant and rude replies. Everyone has to start somewhere.
Yes your suggested treatment is correct, there may be other issues to consider such as are the receipts in the name of the company or your own name but essentially yes you have incurred expenses on behalf of the company that you should be reimbursed for or should be placed in the DLA.

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Replying to NH:
paddle steamer
By DJKL
22nd Dec 2018 20:44

"Ignore all the usual unhelpful, arrogant and rude replies. Everyone has to start somewhere."

They ought not be starting to ply a trade involved in determining debits and credits for others but asking questions re their own business re debits and credits, there lies madness. The place to learn is via courses coupled with supervised work experience.

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Replying to DJKL:
blue sheep
By Nigel Henshaw
22nd Dec 2018 22:04

Oh for goodness sake, you would think they were trying to steal the crown jewels! If you don't know the answer to the original question there's no need to reply.
It takes as long to give a helpful answer as it does to vilify the person who has the audacity to ask a question that you think they should already know the answer to.
Season of goodwill to all, not on AW!

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Replying to NH:
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By Accountant A
23rd Dec 2018 01:33

NH wrote:

Oh for goodness sake, you would think they were trying to steal the crown jewels!

The OP is offering bookkeeping services for reward and so it is not unreasonable to question whether they should be doing so on the basis of their apparent knowledge limits.

I don't know the OP's competence to provide the services he/she offers but it's a matter of potential concern to prospective clients, the AAT and the OP's PII provider.

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Replying to NH:
paddle steamer
By DJKL
23rd Dec 2018 11:06

Oh for goodness sake, do you really think an absence of understanding of very basic debits and credits is a sound basis for starting a business writing up paying clients' books? How difficult is it, five categories of nominal account and two ways one can post to each category.

Frankly stuff the season of goodwill, if you wish to defend the indefensible then all I can say is Bah humbug, sir, Bah Humbug.

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Replying to NH:
RLI
By lionofludesch
23rd Dec 2018 18:11

NH wrote:
Everyone has to start somewhere.

Sure. Somewhere a bit lower down the scale than running your own bookkeeping practice.

I started with a bit of training.

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By BoxFive
23rd Dec 2018 18:09

Guys, just to clarify a few things- I only asked a simple question which required a simple answer. I'm not sure why I'm being attacked for it.

As I'm sure we are aware there are people who set up shop as bookkeepers having just done a course and that's the end of that. I have not just studied, I have actual experience within a work environment.

Alas, I do not do bookkeeping for limited companies- only sole traders so the Director's Loan Account isn't something I've been overly familiar with hence why I asked. It's not that I don't have a clue about anything, I just wanted clarification on a small point.

Thank you to those who were kind enough to answer my question.

BF

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Replying to BoxFive:
My photo
By Matrix
23rd Dec 2018 19:04

Will you register your sole traders for VAT when they start out or did you just register your own business to get some practice?

Do you need a licence/PII/AML cover to submit VAT returns and PAYE for clients? I don't know but would be interested to know what is required as a contact is setting up a bookkeeping business and I assume she will need all this or will have to subcontract from me (not ideal as I would have to check it all).

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Replying to Matrix:
paddle steamer
By DJKL
24th Dec 2018 02:47

I would certainly expect AML as an ASP. I do mine with HMRC. Their newish renewal regime has them actually asking about experience/qualifications, though no idea if they bother reading the answers.

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Replying to BoxFive:
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By andy.partridge
23rd Dec 2018 21:30

You are being attacked for asking a simple question because it is a simple question and demonstrates that you are a charlatan stealing money from hardworking businesses by pretending you are competent.

And a Merry Christmas to you, sir.

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the sea otter
By memyself-eye
24th Dec 2018 10:46

I'm curious why if he's just starting, is the OP both incorporated and VAT registered?

Hammer to crack a nut?

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Replying to memyself-eye:
blue sheep
By Nigel Henshaw
24th Dec 2018 10:54

memyself-eye wrote:

I'm curious why if he's just starting, is the OP both incorporated and VAT registered?

Hammer to crack a nut?


If you don't know the answer to that I suggest you speak to your accountant!
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Replying to NH:
RLI
By lionofludesch
24th Dec 2018 11:05

Touché !!

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