So I got a business start up loan and as I had a builder to pay I had it put into my personal account rather than a business one as I hadn't got one set up then. I've kept records of everything the loan was spent on and know exactly what is left.
I have my income paid into the business account now and will be transfering the remaining £200 over from my personal to the business account.
My question is, should i then ignore that personal account and not relate it to the business anymore, potentially creating a new personal current account where my drawings can go into? This new current account wont have any outgoings history to the business just my own personal income from it.
Step back and look at what you have done in order to unravel it as I think that in your mind you are over complicating it.
You had the loan before you had the business account so it was paid into your own account,
When the business account was set up the movement of virtual funds (not cash shoulf be)
Dr Bank entire amount of the loan
Cr Creditors (loan provider)
There, as far as the accounts go thats your entire initial double entry.
Now, you have taken money from the business for personal use (you didn't take it out of the business but not depositing it is the same effect) :
Cr Bank (amount that you never transfered into the bank because you had already spent it)
Dr Drawings (part of the capital account)
As you can see, you still have the entire amount of the loan as a creditor, the bank now only has the cash in it that was introduced the drawings figure balances everything so everything is where it should be, will be reported correctly and there are no loose ends.
Shaun.
__________________
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.
Quickbooks, like Sage and VT, is just software thats supposed to make your life easier. If you don't understand what the software is supposed to do how will you know whether or not what you are doing is correct?
Try a short course. Something like Business Accounts by David Cox which for under £20 should put you on the right track.
For info :
Dr : Debits
Cr : Credits
The art of double entry is that for every entry there must be an equal entry in the opposit direction.
HTH,
Shaun.
__________________
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.
