Director's Loan Account - what goes on it?

[zonkkk]

I have had my first year accounts done and sent to me to approve.

I was surprised to find that my director's loan account shows a specific figure (although it shows up as paid in full).
However, I have never taken any money out of the business unless they were expenses or mileage which were always recorded before any money was moved out of the company and reconciled appropriately with the bank account.

What is considered to go on the director's loan account?

I have already emailed the accountants but they are not back until Monday.

[TheCyclingProgrammer]

I would expect the DLA to show any personal expenses paid for by the company (where the intention is to reimburse the company) and any money explicitly taken as a loan.

There should be none of the former if you’re keeping your business and personal expenditure separate.

I’d expect director expenses claims for legitimate business expenses (travel etc) to be shown in a separate expense account (because the company owes you).

Ask your accountant.

[ladymuck]

Depends on how your accounts are run, definitely ask your accountant.

I do my own acounts and I chuck everything relating to me (i.e. not expenses directly paid for by the company) into the DLA. Salary, expenses, withdrawals, and then settle it up at the end of the financial year.

[MB2]

Is it positive or negative ?

If it is positive it is for expenses you have personally paid for but not yet recovered ie the company owes you money. Maybe your mileage claim if you can't think of anything obvious as most receipts you would remember paying on personal card ?

[BrilloPad]

Is it positive or negative ?

Good point. I remember when mine was -ve. I thought it was +ve. Hence I paid money back into the company. Which I paid out as dividends. And was then accused of trading while insolvent.....

[Waldorf]

This is the one area of accounts that many contractors fail to grasp and many accountants take advantage of this by ‘hiding’ unknown items. If there is one question you need to ask about your accounts, it is a full breakdown of the directors loan account and then ensure you understand what this means.

[zonkkk]

Good point. I remember when mine was -ve. I thought it was +ve. Hence I paid money back into the company. Which I paid out as dividends. And was then accused of trading while insolvent.....

It's 0. The amount shows up as paid in full... but to my understanding nothing should show up on it paid or unpaid.

[zonkkk]

This is the one area of accounts that many contractors fail to grasp and many accountants take advantage of this by ‘hiding’ unknown items. If there is one question you need to ask about your accounts, it is a full breakdown of the directors loan account and then ensure you understand what this means.

That's a good idea, I will ask for the full breakdown, as I have tried to work out how they came to that figure, but it's not mileage or expenses or the two added up, etc...

[BrilloPad]

Director's Loan Account - what goes in it?

You know when you take a car apart and put it back together you have several nuts and bolts left over that are supposed to rattle round the fuel tgabk?

Director's loan account is the fuel tank....

[aoxomoxoa]

My accountant puts my 'use of home' allowance in the DLA when doing the accounts each year, which acts as a useful prompt for me to extract the money from my Ltd Co.