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Thread: how do you deal with a business loan from the owner(s)?

  1. #11
    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    You need to disclose the terms of repayment in the annual financial statements. This categorises the nature of the liability for the company - either short term, long term, or as I mentioned earlier, part of the capitalisation of the business but dealt wth via loan account rather than issued share capital.
    Quite right. I was thinking more along the lines of why have any other terms than an interest free loan from the director (in the case that the director is the only shareholder).

    The specifics of the terms would vary depending on the company structure.
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    Quote Originally Posted by dsd View Post
    I use Quickbooks 2006.

    Why not just bundle all the accounts you transact on into a single account in quickbooks? i.e. have a directors loan account, and (as Dave said) have a "Petty Cash - Rudi" bank account. Put all the various payment you make on behalf of the business (e.g. credit card payments) through that one account.

    At the end of the day from a business perspective it is a short term liability.

    Wrt the loan, I don't see why there have to be specific terms of repayment laid out. Are there other shareholders/directors?
    I could do that. From a practical stand point, if I pay a server, or Telkom or so, and I pay it from either card it doesn't matter, cause it's from the "pooled account", right?

    Quote Originally Posted by Dave A View Post
    You need to disclose the terms of repayment in the annual financial statements. This categorises the nature of the liability for the company - either short term, long term, or as I mentioned earlier, part of the capitalisation of the business but dealt wth via loan account rather than issued share capital.
    Ok, I understand this. Does it make a difference if I do so after the money was lent to the business? We were rather ignorant when we started out, and grew / learned as we went along.
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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by SoftDux View Post
    Does it make a difference if I do so after the money was lent to the business?
    That shouldn't be a problem at all. As long as both parties (you and the business) agree

  4. #14
    just me duncan drennan's Avatar
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    Quote Originally Posted by SoftDux View Post
    I could do that. From a practical stand point, if I pay a server, or Telkom or so, and I pay it from either card it doesn't matter, cause it's from the "pooled account", right?
    Yes, that one "pooled" account is a total of all the money the business owes to you for day-to-day running expenses.
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    Hi there! I figured that this would be thread for my question as it is similar.
    I am working with Pastel. Unfortunately the company is too small for Pastel payroll. I am having a bit of a blonde moment (yes I am blonde, so I am entitled to these moments): I have a GL account - Asset - Staff Loan. I debit this account, and credit the bank when an employee makes a loan with the company. Now the employee has asked that we deduct R100 per month from his wages to pay the loan. In other words we pay him R100.00 less. How do I record the loan repayment? Thank you in advance for any help!

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    You do this when doing the journals for the wage slip, eg:

    D wages, C bank account - Nett wages actually paid to employee
    D wages, C UIF account - UIF deduction
    D wages, C PAYE account - PAYE deduction
    D wages, C staff loan account - Loan repayment amount each week.

    Thats assuming you're not using any control accounts. Does that work for you?

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    Thanks for the quick reply. That is great!..... *blush*... it was actually as easy as that.... will try to ask more challenging questions next time

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