personal expense from Company accounts

[rwilson]

Hello
I operate through a ltd company for contracting purpose. I had to pay for some personal expenses with my company credit/debit cards. Can I adjust the expense amount with dividend for the next month ? Is there any option available to me without transferring the amount from personal account to company account ?

[Old Greg]

Hello
I operate through a ltd company for contracting purpose. I had to pay for some personal expenses with my company credit/debit cards. Can I adjust the expense amount with dividend for the next month ? Is there any option available to me without transferring the amount from personal account to company account ?

Director's loan if <5k. Document it, pay it back Asap and don't make a habit of it.

[northernladuk]

What exactly are the personal expenses? Are they business expenses or personal stuff? Why did you have to? I assume you have bought personal stuff using company money which is a very bad path to go down. OG has the suggestion but doesn't make the point not to mess up the company money which is the companies and yours which is yours. You cannot interchange the two when you want to.

DL has to be be back in 9 months after the current company year end as well so there are rules. You also cannot do them back to back else you will incur tax on the money.

[rwilson]

What exactly are the personal expenses? Are they business expenses or personal stuff? Why did you have to? I assume you have bought personal stuff using company money which is a very bad path to go down. OG has the suggestion but doesn't make the point not to mess up the company money which is the companies and yours which is yours. You cannot interchange the two when you want to.

DL has to be be back in 9 months after the current company year end as well so there are rules. You also cannot do them back to back else you will incur tax on the money.

Thanks for your reply. Yes , it was for personal expenses. In total , it was around 650 quids over a period of 3 weeks. So is it ok to transfer the total amount back to company account. So where do I document this transaction ? Do I need to inform HMRC about ?

[Gonzo]

Thanks for your reply. Yes , it was for personal expenses. In total , it was around 650 quids over a period of 3 weeks. So is it ok to transfer the total amount back to company account. So where do I document this transaction ? Do I need to inform HMRC about ?

You should be at least keeping a record of expenses and receipts in a cash book as a matter of routine.

Your cash book should have a Directors' Loan Account column so your personal expenses should show as a debit from the DLA and when you repay the money you will credit the DLA to bring the balance to zero.

Oh, and as previously mentioned, don't do it again. (It is widespread in the real-world but it is usually an indicator that the business is about to go down the toilet because the directors are thinking about their own spending rather than the business's).

[Scrag Meister]

You should be at least keeping a record of expenses and receipts in a cash book as a matter of routine.

Your cash book should have a Directors' Loan Account column so your personal expenses should show as a debit from the DLA and when you repay the money you will credit the DLA to bring the balance to zero.

Oh, and as previously mentioned, don't do it again. (It is widespread in the real-world but it is usually an indicator that the business is about to go down the toilet because the directors are thinking about their own spending rather than the business's).

<perplexed>
Really?
</perplexed>

I needed a new car so I took a directors loan at 4% at beginning of new calendar year. Paying it back in full next week from a large div at the beginning of the new tax year. Pay 4% for 3 months, and not have to pay more income tax in the 2011/2012 fiscal year by taking more personal income.

Where does that have anything to do with the company going down the toilet?

[Gonzo]

Where does that have anything to do with the company going down the toilet?

I used the word usually, not the word always. There's a difference.

One-man companies are a special case but I have heard and read plenty of stories about the directors of small companies spending all the company money on themselves when they realise insolvency is approaching.

[northernladuk]

Thanks for your reply. Yes , it was for personal expenses. In total , it was around 650 quids over a period of 3 weeks. So is it ok to transfer the total amount back to company account. So where do I document this transaction ? Do I need to inform HMRC about ?

If you are buggering about spending your company's money on your personal stuff you really need to get yourself an accountant to keep you on the straight and narrow. The penalties could be a bit nasty if you get it wrong so a worthwhile investment if you haven't gotten one. I would take a stab in the dark that this might not be your only problem but are not yet aware so an accountant would be a good idea.