Startup question - Loan or Investment

[TheFaQQer]

SJD advised me just to pay using my personal money and claim it back later when the company had money.

That's what my accountant suggested too.

if you loan the company money, you could charge them interest on it (at an above market rate, since you are taking a risk in investing in a new company with no history), but then you would pay tax on that income. I've read articles advocating this, but my accountant said not to bother (but then, it would mean more work for him to do )

[lnoton]

5. My new iphone £270 (from personal account)

Don't worry about that. It's personal and nothing to do with your company. Unless perhaps you meant "my company's new iphone".

Of course, that is what i meant. Simply dropped the possessive.

I understand that most of the costs are what I would expense, its just the accountancy fees I really need money in the account for in cash invoices aren't paid quickly.

Also, when we say "make sure its an interest free loan" I understand what your saying by this and the implications, but is there some sort of paperwork I need to fill out for these transactions? Or do i simply transfer £x into the company and mark it as a loan, and when i take it back mark that as paying of the loan in a detail column?

[SteveV]

SJD advised me just to pay using my personal money and claim it back later when the company had money.

[thunderlizard]

5. My new iphone £270 (from personal account)

Don't worry about that. It's personal and nothing to do with your company. Unless perhaps you meant "my company's new iphone".

[Jason]

BumFluff has it.. basically what I said, but in more detail.

Just put anything you transfer from personal to business as a loan the business has been granted.

Then pay the loan off. Just make sure it is interest free loan.

[Bumfluff]

That search simply yields how to take loans from the company. I want it the other way round.

For the DD from the business account just pay enough money in to the business account, thats your loan to the business, then when you have some income in the business account you can pay the loan back to yourself from the business account. Anything you have bought from your personal account ie the phone I would just put through as expense and pay yourself the money back out of the business account when you have some money in it.

[SueEllen]

That search simply yields how to take loans from the company. I want it the other way round.

This is what I got when I put in the terms:
http://forums.contractoruk.com/accou...s+Loan+Account

I've copied and pasted relevant parts as you seem to find it difficult finding data.

A Directors Loan is a Loan a Director makes to the company, say to see it through a sticky patch or to cover start up costs.

http://forums.contractoruk.com/accou...s+Loan+Account

Startup costs and anything which directly contribute towards the starting up of the company, eg. company formation fees, website, stationery, equipment. So long as these costs are legitimate (see HMRC guidance), receipted and recorded in the company accounts you can get the money back for them as well (assuming you paid from your own pocket before the company had a bank account etc). They are entered into the main account under the correct heading (eg. overheads->stationery) with the credit going to the directors loan account. You then clear the directors loan account with a payment out to self from company bank account. The DLA is often set up as a 'bank account' in accounting packages so you do a bank account transfer and make a cheque out for the figure to yourself. Well at least that's what I do.

http://forums.contractoruk.com/accou...s+Loan+Account

http://www.hmrc.gov.uk/manuals/nimmanual/nim12016.htm

Quote:
Originally Posted by HMRC
A director’s loan, or current account, with his or her company represents from the company’s viewpoint transactions between the company and the director. It is like a bank account in that it can be in credit (‘cr’ or what the company owes to the director) or in debit (‘dr’ or what the director owes to the company). Similarly there might be an agreement to pay interest, in either direction, depending on whether the account is in credit or overdrawn. Unlike a bank account however, the value of items other than cash can be debited or credited.

[lnoton]

Search for "Directors Loan Account"

That search simply yields how to take loans from the company. I want it the other way round.

[lnoton]

oh.. one question. why would anyone shell out for an iPhone?

Very expensive toy to be honest.

Unfortunatly I have a problem with anything made by Apple. Plus I have to hand my company mobile phone back next week so I need to get one ASAP.

[Jason]

oh.. one question. why would anyone shell out for an iPhone?

Very expensive toy to be honest.

[Jason]

I loaned my company the cash to startup.

Then had the company pay it back over the first 3 months. I made it an interest free loan to the company so I would not have to worry about it too much on my personal tax return.

I used the loan to pay my salary and such. Just moving money around really

[SueEllen]

Search for "Directors Loan Account"

[lnoton]

Hello all,

I have formed a company, bank account paper work has been sent off.
I have selected SJD as my accountant.

I start my first contract on the 21st of this month am getting paid weekly. Although I'm unsure how quickly i'll get paid.

My question is this: I have a number of expenses incurred already, namely:

1. First months accountancy fees (Due 1st Feb @ c. £100 direct from business acount)
2. Cost of setting up business (from personal account)
3. Cost of getting business cards made up (from personal account)
4. Mileage to office where my contract starts to drop of paperwork in person
5. My new iphone £270 (from personal account)

and probably more.

My business bank account will no doubt have no money by the time the accountancy fees come out, I guess I can claim expenses (2-5 back at a later date).

How do I go about putting some capital in to the company to cover costs before I get my first invoice paid by the agent?

I have personal money, do I just wack in £1000 into the business account and take it back when I get some turnover? How do i show this on the accounts?

Many thanks for your time. I'm sure SJD can advise, but I would like your opinions so I don't go in blind.

Laurence.