Hi everyone. Hope all is well. I need your expert advice.

I'm currently the bookkeeper for a small close corporation that provides road freight services that is managed by a husband and wife.

The wife is the only member of the close corporation.

They run the business from their private residence. The bond of the private residence is registered in the name of the husband & wife.

The CC pays the bond on the private residence, which is accounted for as follows:

Dr - Members Loan Account: Home Loan (Balance Sheet)
Cr - Business Bank Account (Balance Sheet)

The wife receives a small salary from the CC (from which PAYE and UIF is deducted and paid over to SARS), which is accounted for as follows:

Dr - Salaries (Income Statement)
Cr - Members Loan Account: Member1 (Balance Sheet)

The wife pays various personal expenses from the business bank account, which is accounted for as follows:

Dr - Members Loan Account: Member1 (Balance Sheet)
Cr - Business Bank Account (Balance Sheet)

The "Member Loan Account: Home Loan" has been allowed to grow to a substantial debit amount (R400,000+) over the last couple of years.

To make matters worse, they recently purchased a new vehicle (in the name of the husband) but the CC pays the instalments, which is accounted for as follows:

Dr - Members Loan Account: Vehicle Instalments (Balance Sheet)
Cr - Business Bank Account (Balance Sheet)


My question is, how do I resolve this substantial debit member’s loan account? Do I increase the salary of the wife? Do I draw up a rental agreement between the CC and the husband and wife whereby the CC rents office space in the house at a market related price? Do I declare a "dividend" of R400,000+ ?

Any constructive, helpful advice would be appreciated.

Regards
Trevor