Unaware of Directors loan

[Darren at Fox-Bartfield]

Directors Loan

Bit concerning that the accountant hasn't picked this up or mentioned an overdrawn directors loan account at the year end, let alone through the year itself. Highlights one of the benefits of a realtime system such as Freeagent.

[radish2008]

Yes, SJD. Much experience with them?

I found myself with a directors loan at SJD - never actually got to the bottom of it - settled it after a few years and paid a bit of interest. I'd get rid of SJD if I were you - this is likely to be the start of more troubles. Plus their online system is tulip I've heard - switch to Free Agent - I can recommend Darren.

[MrButton]

At intouch everything seems to go through the directors loan (dividends/salary/expenses etc) but you get a monthly summary when you close your month of accounts and as long as you pay everything as listed then it’s always £0. Seems a nice way to do it.

I assume FreeAgent does something similar.

[craigy1874]

There is no need to run everything through a director's loan account. In fact, I think it is a terrible idea.

Pay your salary separately and base it on your payslip.
Pay your dividend(s) separately and prepare your divi minute/voucher.
Pay your expenses separately based on your expense claim.
If you want to take a loan, take that separately.

Taking 'drawings' and putting them to your loan to then 'sort it out' at month/year end is just asking for trouble IMO.

[northernladuk]

At intouch everything seems to go through the directors loan (dividends/salary/expenses etc) but you get a monthly summary when you close your month of accounts and as long as you pay everything as listed then it’s always £0. Seems a nice way to do it.

I assume FreeAgent does something similar.

You know what assume does....

[MrButton]

You know what assume does....

No.

But let me ask my accountant.

[northernladuk]

No.

But let me ask a FA accountant.

FTFY

[MrButton]

FTFY

It didn't need fixing.

My accountant is a FA accountant.

[Alan @ BroomeAffinity]

Unaware of Directors loan

There is no need to run everything through a director's loan account. In fact, I think it is a terrible idea.

Pay your salary separately and base it on your payslip.
Pay your dividend(s) separately and prepare your divi minute/voucher.
Pay your expenses separately based on your expense claim.
If you want to take a loan, take that separately.

Taking 'drawings' and putting them to your loan to then 'sort it out' at month/year end is just asking for trouble IMO.

Beat me to it. I was just about to post the same. Why use a DLA when you don’t have to. IME, it just causes extra work, and gives HMRC something to delve into should you ever be investigated.

[Jessica@WhiteFieldTax]

Beat me to it. I was just about to post the same. Why use a DLA when you don’t have to. IME, it just causes extra work, and gives HMRC something to delve into should you ever be investigated.

Agree. 10, 15, maybe 20, years ago, it was the norm, but life’s now moved on. (Christ, I sound old)