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usermuscleworkuk
October 25, 2021
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Under what account/category should directors' loans be under? They are not "income" as such and therefore I don't wanted them to be taxed.

  • October 25, 2021
  • 1 reply
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Original commenter did not share additional details
Best answer by JoesemM

Thanks for getting back to us, @usermuscleworkuk.

 

You can record the director's loan by setting up an equity account. Then record the investment. Before doing so, I'd encourage you to reach out to your accountant to ensure your financial data is accurate and select the appropriate account for your deposit.

 

Here's how:

 

  1. Click on Accounting at the left pane, then select Chart of Accounts.
  2. In the Chart of Accounts window, tap New.
  3. From the Account Type drop-down, choose Equity.
  4. From the Detail Type drop-down, choose Owner’s Equity.
  5. Fill in the other information, then hit on the Save and Close button.

 

Then, record a deposit into your equity account if the bank is not connected. If you have connected your bank account, there is no need to record the investment but categorize the transaction associated with your deposits. For more information, click this article: Record an owner's contribution or capital investment in your business.

 

Once done, you can now record loan payments. Additional details can be found in this article: Make a loan payment in QuickBooks Online. Here you'll find steps on how to record interest and bank fees payments. 

 

Also, we don't advice to mix personal and business funds, you may encounter situations that will require you to do so. To guide you further in recording such transactions, I'd recommend checking out this article: Mixing business and personal funds.

 

If you have any other questions about tracking the owner's draw or payments in QBO, let me know by adding a comment below. I'm more than happy to help. Keep safe, @usermuscleworkuk.

1 reply

A
Ashleigh1
October 25, 2021

Hello Usermuscleworkuk, 

 

Welcome to the Community page, 

 

In order to help you with your Question we need to know if it is an actual loan account or is it where you are putting money in and out for personal use? 

U
usermuscleworkukAuthor
October 25, 2021

It was money that the two directors/owners put in to start the company (buy stock etc). There is no time limit on the loan and no interest.

 

Basically it’s myself and my husband who put money in from savings to start our business. We’d eventually like to get the money back but there’s no time frame on it. 

JoesemM
JoesemMAnswer
October 25, 2021

Thanks for getting back to us, @usermuscleworkuk.

 

You can record the director's loan by setting up an equity account. Then record the investment. Before doing so, I'd encourage you to reach out to your accountant to ensure your financial data is accurate and select the appropriate account for your deposit.

 

Here's how:

 

  1. Click on Accounting at the left pane, then select Chart of Accounts.
  2. In the Chart of Accounts window, tap New.
  3. From the Account Type drop-down, choose Equity.
  4. From the Detail Type drop-down, choose Owner’s Equity.
  5. Fill in the other information, then hit on the Save and Close button.

 

Then, record a deposit into your equity account if the bank is not connected. If you have connected your bank account, there is no need to record the investment but categorize the transaction associated with your deposits. For more information, click this article: Record an owner's contribution or capital investment in your business.

 

Once done, you can now record loan payments. Additional details can be found in this article: Make a loan payment in QuickBooks Online. Here you'll find steps on how to record interest and bank fees payments. 

 

Also, we don't advice to mix personal and business funds, you may encounter situations that will require you to do so. To guide you further in recording such transactions, I'd recommend checking out this article: Mixing business and personal funds.

 

If you have any other questions about tracking the owner's draw or payments in QBO, let me know by adding a comment below. I'm more than happy to help. Keep safe, @usermuscleworkuk.

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