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Sole trader paying for limited company mortgage?

I have a sole trader which is paying for the mortgage of a limited company, what would this go under

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Hi there,
I’m currently stuck on what I should log something under as, (expense) in Quickfile.
I run a business (sole trader), the business’ current account is used to pay for another (different) (limited company) business’ mortgage too.

I’m not too sure on what expense I should log this as under the company, would someone mind to explain to me? Thank you.

All input is extremely appreciated!

Replies (6)

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By Duggimon
09th Apr 2020 15:00

Is there a business reason for this setup? On the face of it it sounds like it's probably drawings.

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By zebaa
09th Apr 2020 18:15

The sole trader is either making a loan or a gift (eek! ) to the limited company.

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By Truthsayer
09th Apr 2020 18:52

'Practising accountanting', eh? Why not ask a real accountant, and pay him for his advice?

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Stepurhan
By stepurhan
09th Apr 2020 19:33

The first step is knowing that a sole trader and a company are two very different things for both legal and tax purposes. Your post appears to be confusing the two.

Beyond that, we are just guessing. Without knowing why a sole trader is paying a limited company's mortgage, we cannot say.

As already stated, drawings is the most likely answer, but it could be any number of things. Perhaps the sole trader is renting business premises and the rent payments happen to match the mortgage payments exactly (which would be very odd). Only you would know.

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By johngroganjga
09th Apr 2020 19:47

It’s not an expense for the company, it’s a receipt. Where the credit should go in its bookkeeping depends, as others have said, on what the terms between the company and the person making the payments are. Is the person making the payments expecting the company to reimburse them in due course?

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ALISK
By atleastisoundknowledgable...
10th Apr 2020 07:37

The answer to your question is Cr DLA, Dr interest Dr mortgage, but I don’t think that that’s what you meant to ask.

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