Director's Loan TO Limited Company

[sher]

My new limited company hasn't yet invoiced its client; my business banking account has no balance yet. However, the company needs to pay the monthly insurance fees etc. as standing order from this business bank account.

Can I, the director, lend the money to the company by simple online transfer from my personal account to business account? Do I need to document/record this transfer as loan payable etc.? Does this documentation have to be in any specific format? As soon as the company is in the funds, I will take the loan back (at no interest, of course).

[Craig@Clarity]

Hi Sher,

This is really simple to administer. Just transfer the amount into the company which you can later transfer back out tax free. No documents needed. Just keep a track of how much you've lent the company so that you don't over-reimburse yourself.

[ThomserveBAS]

I can vouch for the ease of doing this - when I started up, I needed some equipment but didn't have any money to draw from the business so I "loaned" the business £2000 of my own money, just a BACS transfer in to the business account. I then used the cash to make the purchase.

Over the coming weeks I withdrew the loan in £500 installments, clearly identifying the transfer as "LOAN REPAYMENT" on my online banking.

Easy.

[NotAllThere]

It's what the director's loan account is for. (Though usually it's used in the other direction).