Originally posted by aoxomoxoa
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Director's Loan Account - what goes on it?
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"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." Cicero -
I have heard back from my accountant.
Apparently, if I as a director register two separate claims:
- £500 for mileage;
- £50 for subsistence expenses;
and I then withdraw £550 on the same day from the company's bank account and reconcile the two expenses with the 1 withdrawal, this will show up in my directors loan as £550 but repaid.
The reason being, they are separate expenses but only one withdrawal.
This just sounds backwards but they say it is standard practice. Is this correct?Comment
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It sounds backwards to me. FreeAgent has separate expense accounts to be directors loan account which makes more sense to me.
You register £x amount of expenses in an expense claim and this goes into the employee expense account.
When you withdraw the money it reduces the balance in the expense account.
No reason I can see to mix this up with the loan account. I would only put expenses in there if I’d purchased something on behalf of the company (ie in the company name) to show that I’ve effectively loaned that money to the company, which is not the same as making an expense claim for out of pocket expenses.Comment
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Can any of the accountants here say if this is standard procedure or not?
If you pay out of the company one amount to cover two expense claims, this would go on the DLA?Comment
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Originally posted by zonkkk View PostCan any of the accountants here say if this is standard procedure or not?
If you pay out of the company one amount to cover two expense claims, this would go on the DLA?
10 years ago, when I was running a small company, the accountants used the DLA accounts for all Directors incomings and outgoings. It just kept it easier.
It's still a plausible method, as long as it get's paid off, but in the days of Freeagent it's lazy. As others have pointed out, FA keeps it own separate journals for expenses, salary, loans etc. so lumping it all in one DLA is pointless now.
One exception is where a mistake is made (overpaying dividends or expenses for example) a DLA can be used to clean it up without breaking the law.See You Next TuesdayComment
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Directors Loan
Agree with @lance, it's a bit lazy if using Freeagent in particular as should go directly against the expenses.
Normally, when preparing the year end accounts, an accountant should let you know what's gone through or the balance of the directors loan account. Freeagent makes this process much simpler as CP states as it keeps the expenses, salaries, dividends, etc in separate accounts therefore makes it much more simple to identify.
When using manual methods, the DLA tended to be an account that was used for all of the above plus any underpaid expenses that were put through at the year end.Comment
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Thanks, Darren.
They use their own online system which I update myself with all the information and I like to keep things clean and tidy. So I just found it strange.
I was told that if I pay each expense separately as they are recorded they won't show up in the DLA. I believe they have some kind of automation in place.Last edited by zonkkk; 26 December 2017, 14:39.Comment
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