Good Morning All,
I am the sole director of a startup and i am in the process of submitting my first accounts as a Micro Entity. I am currently at the balance sheet stage and i am lost as to how to record my Director to business loan. I was advised to record it as both an asset and a liability. I have added the loan amount as an asset and a liability (currently under creditors) and i'm unsure how to proceed.
Do i record the £2,000 loan i put into the business under the relevant creditors section and record a statement declaring the director to business loan at the later stages of the process? Do i not record the loan to the business under creditors and just record it as a statement? There is a lot of information online for business to director loans, but nothing for the reverse. Any help is much appreciated!
Replies (7)
Please login or register to join the discussion.
I would always recommend getting an accountant, the earlier the better as they can save a) the worry that you have now and b) the cost (professional or tax) or correcting any errors.
That said, the answer to this is (making some technical assumptions) relatively simple. Presumably the £2k you paid into the company’s bank account? If so, then the debit side of the transaction is already accounted for in the bank balance. The credit side should be shown as a ‘director’s loan account’.
You're clearly floundering. The loan is either an asset or a liability in the company's books. It can't be both. You've either misunderstood what you've been told or simply been given carp advice.
You've identified this problem. The big question is what problems are there that you haven't noticed yet ?
Get an accountant. You may say that you can't afford one. I would say, can you afford not to?
I am not just another alarmist and I am definitely not an accountant. I am a bit further down the line then you are but you are and with a strangely similar problem.
I think, definitely get an accountant but do your homework I also think, personally, that you should have some terms and conditions of business worked out with the accountant so that you are both clear on each others responsibilities to avoid confusion later.
People would just recommend themselves - which is worthless - but, anyway, we don't know where you live.