Paying the owner back for business expenses which were paid with owner's personal money

CraigWooff · ‎September 14, 2019

My business is a limited company.

I have been paying business expenses (subscriptions, insurance, legal costs etc) with my own personal money as the business had not made any money yet. (Start up company)

The business has now made money and I want to reimburse myself, not just make a record of it.

First question: Is writing a cheque and then creating a Journal Entry the only way to do this? if not, how else?

Second question: If I use the cheque option can I still just transfer the money via online banking from the business bank account to my personal bank account once I have created the cheque?

Third question: When filling in the Journal Entry, under Account (on the creditors line) do I choose 'Director's current account'. I have read I need to use 'Owner's Equity' but that is not an option

Rustler · ‎September 20, 2019

As a limited company you so not have owner equity accounts.

paying for the company expenses in a limited company is really a loan to the company, so you should set up the loan account, due to [name] or something like that

then you make the entries as a journal entry

debit the expense account and credit the loan due-to account

yes, use write checks with the loan due-to account as the expense for the check to pay it back. If you transfer the funds from company to personal, then on the check just change the check number to EFT (electronic funds transfer).

View solution in original post

Rustler · ‎September 20, 2019

As a limited company you so not have owner equity accounts.

paying for the company expenses in a limited company is really a loan to the company, so you should set up the loan account, due to [name] or something like that

then you make the entries as a journal entry

debit the expense account and credit the loan due-to account

yes, use write checks with the loan due-to account as the expense for the check to pay it back. If you transfer the funds from company to personal, then on the check just change the check number to EFT (electronic funds transfer).

Topics

Training

Community

Resources

Paying the owner back for business expenses which were paid with owner's personal money

Paying the owner back for business expenses which were paid with owner's personal money

Paying the owner back for business expenses which were paid with owner's personal money

Need to get in touch?