Sage Instant Accounts Director's Loan Accounting

[Innovativo]

Hi,
I'm just setting up my books on Sage Instant Account (v15) and want to correctly record my Director's Loans. I've seen a number of ways on here how this can be achieved but was seeking advice for my particular circumstances. Any advice gratefully received... The scenario is this:

1. At start-up I invested £1,000 of my own cash transferring this money via BACS from my personal account to my business bank account.

2. During start-up, before the start of my business' 1st financial year, I incurred personal spend (debits from my personal bank account) on stuff like Companies House Fees, Business Cards etc. These total around £500.

3. Once my company was formed it took a while to establish the company bank account. During this time I incurred expenses that I paid for from my own cash in my personal account. These total around £700.

The total DL is therefore £2,200 (1,000 + 500 + 700).

4. Once my company started generating its own revenue, I repaid parts 2 and 3 of the loan as a BACS payment from my business account (£1,200)

My accountant wants me to record the personal expenses in 2 and 3 as a Director's Loan.

Can someone walk me through the best way to record this in Sage. The way I was planning to do this was to create a new bank account with NL code 1252. However, when I record the receipt of the DL (£2,200) into this account, I have to enter an NL code for the transaction (in keeping with Double Entry BK). What NL code should I use?

Someone on the forum suggested it would be better to create the DLA as a current liability (NL code 2103).

What's the best way of doing this and can someone walk me through it please? I'm starting with a clean slate on Sage, i.e. I've not entered any transactions on the live company data yet. As an example, do I count the pre-fy transactions as the Opening Balance to the DLA or record them as a payment into the account?

For some reason this is baffling me despite having mastered Flat Rate VAT accounting and PAYE on Sage!!!:rolleyes:

Thanks in advance

[Scalloway]

If you are using the DL account as a Sage Bank Account you should do a Bank Payment from that account with the other code being the relevant code eg Stationery. I would do each item separately to make it easier to see what is included when you look back at a later date. One point to bear in mind is that Sage aggregates Bank Payments with the same date and reference in the Bank Account.

[semsley]

It doesn't aggregate them if you untick the box "group items" in bank defaults.

[weebly_one]

I would personally do the following

Set up a DLA account as a bank account in Sage e.g.1252. Make sure this is set up as a 'floating' account in the Chart of Accounts - which the bank account 1200 will already be in the COA in V15 (If you are unsure how to do this go to Company, Chart of Account, Edit and use the F1 key to bring up context sensitive help)

1) Go to Bank - Transfer and enter a transfer from 1252 to 1200 with Capital In/Directors Loan as the details.

1200 will show a DR of £1000 and 1252 will show a CR of £1000

2)Go to bank - bank payments - using 1252 as the bank code enter the invoice/reciept details for the personal expenditure with a different line for each type of expense - eg Stationary/Professional fees etc. Use the first date of the financial year and put the expense details and start -up in the details.

1252 will show a CR of £1500
The relevent P&L accounts will show a combined DR of £700 (unless you are VAT registered in which case the net ammount will show here with the VAT element in the VAT account on balance sheet)
1200 will show a DR of £1000

3) Go to bank - bank payments - using 1252 as the bank account enter all the invoice/reciepts for the expenses incurred since start up. Use the date the expense was incurred - the suppliers name in the reference and the details of the expense in the details.

1252 will show a CR of £2200
The relevent P&L accounts will show a combined DR of £1200 (unless you are VAT registered in which case the net ammount will show here with the VAT element in the VAT account on balance sheet)
1200 will show a DR of £1000

4. When you have recieved revenue into 1200 and want to repay yourself, go to Bank - Transfer and enter the ammount you have repaid yourself on the date the payment is made with 'Transfer to Directors' as the reference.

1252 will show a CR of £1000
The relevent P&L accounts will show a combined DR of £1200 (unless you are VAT registered in which case the net ammount will show here with the VAT element in the VAT account on balance sheet)
1200 should reflect the correct ammount as per your bank statement!

You should not journal to bank accounts - this includes notional accounts like the DLA (1252 or whatever you choose - I choose 1260 personally to space it away from the 'real' bank accounts) Bank Accounts should use the payments/reciepts/transfer windows from the bank module then you do not need to worry abour debits and credits as sage does it for you.

I hope that helps, and that I have for it right as I am not normally up this early!!

I also leave the 'requires bank reconciliation' button on for DLAs, and do a mock bank rec matching the expenses to the repayments I have made myself always leaving a nil balance at the end of any reconciliation process - that way in the reconciliation window for the DLA I can easily see what I owe myself at any time.