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Level 1

Negative Director's Current Account when running Year End... help!

Hey there, so bear with me but this is all new. I have a small business that was started in July 2019. There wasn't a huge amount of activity in the business, but as a Director, I loaned £564 which was paid into the Director's Current Account in Quickbooks. I worked on the business' first project and the business got paid for the work. The first mistake I made was that I then invoiced the business as a Director in order to pay myself. Doing this left my Director's Current Account in a negative balance before Year End, because I paid myself more than my initial £564 loan had been.


I have since realised this is not the way to pay myself, and have set up Payroll. In order to try and fix my issue with the Director's Current Account, I have run payroll for September 2020 and October 2020. Instead of actually paying the money from the business bank account (because I had already paid myself with these invoices in 2019), I transferred the salary liability, debiting the bank account and crediting the Director's Current Account.

 

My issue is that because I did this after my year end, filing my accounts is proving difficult because of the negative balance. Can anyone help me make sense of this?!

2 REPLIES 2
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QuickBooks Team

Negative Director's Current Account when running Year End... help!

Hello maxshepley, Do you have an accountant?  There is the option of using a journal to correct the balance. We'd recommend speaking to an accountant for advice on this as we can not give accountancy advice as if you are removing the negative balance you have to account for it somewhere else. We do welcome other Community users to reply to the thread if they have had similar scenarios.

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Level 1

Negative Director's Current Account when running Year End... help!

Hey Emma, thanks for your response!

 

I don't currently have an accountant because I'm so small - just looking for a way to rectify this particular issue! I was hoping there'd be a way to sort this through manual journal entries but am unsure if I'm able to backdate as far back as July so that I can sort my year end report.

 

Hopefully some community members might have some insight!