Savcon

[Savcon]

Hi

I am one of 2 directors in a small company, after starting up there has been insufficient funds available to draw a salary but we have both taken monies from the company bank account from time to time. Our loan accounts are currently in a debit balance as a result. There are no assets in the company besides the money in the bank from work we have brought in.

If I want to leave the company, what happens to the money which is reflected in my loan account as a debit amount? and do I simply resign as a director?

[Andromeda]

Hi Savcon
As matters stand, "there has been insufficient funds available to draw a salary but we have both taken monies from the company bank account from time to time" is probably a contradiction. I guess SARS will most likely regard it as deemed dividends and expect the company to pay dividends tax on the debit balances. Alternatively convert the loans to interest bearing loans as opposed to tax fee loans, but the values may make this a problem?Perhaps let the independent accountant who either compiles or reviews the annual financial statements advise you, because the best path will also depend on the actual numbers. Either way, you will most likely have to settle the debit loan account.

You can resign now as a director, but besides your written resignation there is a process to follow at CIPC. PM me if you require the service.

[Savcon]

Hi Savcon
As matters stand, "there has been insufficient funds available to draw a salary but we have both taken monies from the company bank account from time to time" is probably a contradiction. I guess SARS will most likely regard it as deemed dividends and expect the company to pay dividends tax on the debit balances. Alternatively convert the loans to interest bearing loans as opposed to tax fee loans, but the values may make this a problem?Perhaps let the independent accountant who either compiles or reviews the annual financial statements advise you, because the best path will also depend on the actual numbers. Either way, you will most likely have to settle the debit loan account.

You can resign now as a director, but besides your written resignation there is a process to follow at CIPC. PM me if you require the service.

Many thanks for your reply