the director has simply loaned money to the company. What the company then does with that money is down to the company and the company can reclaim the VAT on its purchases.
The company still owes the director the original amount of money that they loaned to the company.
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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.
Silly question but I have to ask (appologies in advance and no insult is intended).
We are not talking about the director making personal purchases through the company and company reclaiming VAT on that are we?
As I say, I know, silly question.
kind regards,
Shaun.
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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.
I meant the director paying from his own pocket for business related expenses like he paid with his credit card for stationary, or with his cash for parking ect..
its as thugh the director has loaned the money to the company and then the company has spent the money but the middle bit where the company receieves the money before spending it is just missed out.
For more substantial purchases where named receipts are produced he should still try to transfer the money to the company to keep the paper trail sweet. But for minor purchases there's no issue.
kind regards,
Shaun.
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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.
A silly question from me if I may with regards to above: when director loans money to the company, for example he pays for petrol with his credit card, then entries will be Dr Petrol / Credit Director's Loan?
Your basically treating the DLA itself like a bank account.
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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.
A silly question from me if I may with regards to above: when director loans money to the company, for example he pays for petrol with his credit card, then entries will be Dr Petrol / Credit Director's Loan?
Except, small companies normally don't have a car on their BS nor they have a car lease agreement. So it would be a case of a director using his/hers own car and thus any petrol they purchase is used partly for personal purposes. Correct me, if I am wrong here.
If this is the case in your company then the above double entry is correct only to record the business related expense.
If the company is VAT registered then you should also extract the input VAT.
