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Post Info TOPIC: Keeping records of initial investment and directors loan
johnwheal


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Keeping records of initial investment and directors loan
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I have very recently started up a small business. To help me keep track of the finances I am using Sage One. I have a few years experience in book keeping as I was previously self employed. 

I started the company with an inital share capital of £xxx. I am also investing a further £xxx into the business to get it started (I would like this money back at the end of the year if the business makes a profit). As I understand it I need to invest the money as a directors loan. I'm confused as to how I keep an account of this money. I phoned the Sage One support people who were very helpful and told me to setup a new bank account in sage one called directors loan, and then transfer the money from that account to the businesses current account. (The directors loan account will then be negative.) This all makes sense (I think) as it will show up as a liability in the balance sheet. I was then reading that when you put money into a business the directors loan account should be positive. Is this correct and how do I record this?



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Shamus


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Hi John,

welcome to the forum. Good to have you on board.

Sage are correct in the way that they explained this.

You put the money into the DLA then transfer out of the DLA to the bank account. The DLA will be in Credit until you are repaid.

As you say, it should show up as a liability (Creditors, amounts falling due within one year).

The above agreement is in principle. As for a Sage specific response I'll leave that to others as I don't use Sage software in my practice.

kind regards,

Shaun.

p.s. look, look everyone. I kept one of my new year resolutions and didn't ignore a post just because it had Sage in it. biggrin



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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Rhianrach


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Keep it up Shaun, the first post is always the hardest. smile



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