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Level 3

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

 
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Best answer 02-07-2019

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Level 15

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

If the company is loaning money to the director, create an asset account titled something like due-from-[name]

if the director is loaning money to the company, create a liability account titled something like due-to-[name]

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Level 15

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

If the company is loaning money to the director, create an asset account titled something like due-from-[name]

if the director is loaning money to the company, create a liability account titled something like due-to-[name]

View solution in original post

Level 3

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

This is directors loaning money to the business, we have two directors so I'll set up two accounts. I'm guessing these accounts can have positive and negative balances?
The term of the loan is unknown, possibly over 12 months, would this be Account Type; non-current liabilities. Detail Type; Share Holder Notes Payable and Name; [Director name] Directors Loan Account?
Thanks.
Level 15

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

No the liability account will not have a negative balance unless the company over paid the director when paying off the loan.  To pay him back, write a check and use that liability account as the expense (reason) for the check

Yes on the account set up
Level 3

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

Certainly in the UK, it is frowned on for directors' loan accounts to be an asset of the company - HMRC will naturally treat such asset balances as earnings (subject to National Insurance contributions as well as income tax).
Level 15

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

Wow I was not aware of that, how strange to treat it that way.

So in keeping with the UK requirements, how do you record loan money to the director?
Level 3

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

Thanks for all your help. As a Non-current liability I'm set up properly then?. I'm less clear on the Detail Type; 'other non current liability','provision for liability' or 'share holder note payable' which is the right one for a directors loan into the company in a UK ltd company?
Level 3

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

@Rustler - Tips & Tutorials - that would be as a current asset. Although bearing in mind my previous comment, the book-keeper should endeavour to train all directors not to borrow money from the company, but better to use their own bank. No doubt the interest will be higher, but there will not be a tax liability attached.
Level 3

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

@James - "Non-current Liability" should be fine. You will need to ensure that you maintain a seperate account (sub-account) for each director, though, if only to ensure that HMRC don't get unduly excited.
Level 1

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

I would like to loan my company money in order for the business to use as a deposit on a property purchase.  

does anyone here know how to set up an account for me to loan the money to the company.   Clearly I must pay the money into the company bank account.  But I don’t know how to record this transaction on QuickBooks Online

 

 

QuickBooks Team

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

Glad to see you in this thread, @FBTMark. I'm here to guide you on how you can record the loan to the company to use for purchasing a property.

 

Purchasing a property is considered as purchasing a new asset. To record the loan, you'll need to set up a liability account first. Then, create a journal entry to apply the loan to the proper asset account. Here's how: 

 

Setting up a liability account for a loan:

 

  1. Go to the Accounting tab on the left menu.
  2. Select Chart of Accounts, then click New on the right.
  3. Choose either:
  • Current Liability - To be paid in full within one year.
  • Long-term Liability - To be repaid over more than a year. 

       4. Select a Detail type in the drop-down, then select Next.

       5. Enter the name of the account.

       6. Leave the Unpaid Balance blank, then select Save.

 

Creating a Journal Entry to apply the loan to the proper asset accounts:

 

  1. Go to the Plus (+) icon at the top.
  2. Choose Journal Entry under the Other column.
  3. On the first line under the Account column, click the field and choose your new liability account in the drop-down list.
  4. Enter the amount of the loan you’re applying to the asset under the Credits column.
  5. For the second line, choose the appropriate asset account under the Account column.
  6. Enter the amount of the loan you’re applying to the asset under the Debits column.

 

I'd suggest you speak with your accountant for the proper posting of your transactions. You can also read through this help article: How do I record the loan for an asset? It helps you learn about how loans account works in QuickBooks Online. 

 

For future reference, check out this help article: Record a loan and its payment. It will guide you through creating a loan payment if it's time for your business to pay the loan. 

 

Feel free to message us again if you have follow-up questions. You can always count on us here in the Community at any time. Have a great day ahead. 

Level 1

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

Hi Folks,

I'm (also) setting up a Director's Loan Account and given some of the comments in this thread I'd just like to double check the best way of doing this please...?

 

So:

1. Create an Account - Account Type of "Current Assets" (or should it be Non-Current Assets? - assume that wouldn't be correct).

2. Detail Type is "Loans to Officers" (my company is a small Ltd. company).

 

I could then create a Sub Account relating to the specific Director with the correct balance etc...?

 

Is that correct and any other tips?

 

Many thanks in advance.

 

 

QuickBooks Team

What's the correct way to set up a directors loan account in quickbooks online UK? We have two directors of a Ltd company.

Hi Leigh_C

 

Is the director lending the business money or is the business lending the director money?