How should I record money I lend to my limited company?

Question

Expert Bookkeeping Services · Accepted Answer

Record a director's contribution as a liability owed by the company where it is genuinely a loan, not as sales. Keep a director's loan account and distinguish lending from salary, expenses, share capital and dividends. Document the transaction Keep evidence of the transfer and its purpose, and agree any repayment or interest terms. If you pay a company expense personally, retain the invoice and record the reimbursement balance appropriately. Money introduced as share capital is a different transaction and should follow the relevant company records rather than being casually reclassified. Monitor the account's direction A balance the company owes you differs from a balance you owe the company. An overdrawn director's loan account can create company and personal tax consequences, particularly when it remains unpaid. Interest and benefits can have separate rules. Ask your accountant to review the account before year-end and before making large repayments or withdrawals.

How should I record money I lend to my limited company?

Short answer

Detailed answer

Document the transaction

Monitor the account's direction

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