A Director has borrowed money from the company for a personal purchase. Do not want to record it as such as don't want it to look like income to Director. So 1) How do I document the long term loan and 2) record the payments being made into the company bank account to start paying off the loan?
Thank you
Hello jacky-ferguson-n, In the case where the director used money from the business rather than loaning money to the business, then yes you can create an asset account; select accounting > chart of accounts > new > account type will be current assets > in the detail type select loan to others > enter a name e.g. Directors loan> save and close. When you then forward the amount to the director, we presume from your business bank account, create an expense; select the New+ icon > expense > Enter/create the director in the payee field > in the payment account select the bank account the amount is being paid from > in the date field select the date the amount was debited from your account > in the category column enter the asset account you created earlier > enter the amount of the loan in the amount column > in the amounts are field select No VAT > save and close. When the director pays you the amount back, or a proportion, create a bank deposit; select New+ > bank deposit > in the account field in the top left ensure you have selected the bank that the amount was received to and the corresponding date in the date field > in the received from column, within the 'add funds to this deposit' section, enter the name of the director > in the account column select the asset account in the amount column enter the amount that was received > in the amounts are field select No VAT. It is recommended by HMRC for directors not to loan money from the business so you may want to confirm with an accountant.
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