Director's Loan Account

[stphnstevey]

I am just keeping a Profit and Loss Sheet only as I am a contractor and my accounts are fairly simple (one invoice and one salary and expenses per month).

I want to show the Director's Loan Account, as I have put some money into the company. But I don't want that mixed up with other taxable income. Where would I show it in the P+L? Or if you don't normally show it in the P+L, is there a simple workaround?

I simply don't want it included with taxable income, particularly when calculating dividends

[dp0848]

It goes on to the balance sheet, not the P&L.

CR DLA

DR Bank.

David.

[KM-Tiger]

..... as I have put some money into the company.

If you have put anything else into the company then its value can also appear in the Director's Loan account. Equipment or stock perhaps.

DLA's are one of the few free lunches in taxation, as you can draw the money back free of tax, cashflow permitting. So the bigger its value the better.

[stphnstevey]

Thanks. For your smaller clients that might be keeping their own books and not quite understand how to keep a Balance Sheet, what would you advise on noting the Director's Loan Account or would you just show them how to keep a Balance Sheet?

Hope you don't mind me asking a similiar question, but where would the income from new allotment of shares be shown?

[dp0848]

For money from the sale of new share:

Dr Bank

Cr Share capital

My approach is to teach them how to keep a balance sheet. We act for a number of contractors and as you say the accounts are very simple as is the keeping of a balance sheet. We offer our clients a free helpline so if they get stuck they just pick up the phone or drop us an email.

David.

[TraceyAnn]

If you need a directors loan account, then you must be a limited company, in which case you need more than just a profit and loss account to submit to companies house.........or have i missed something?:)

[stphnstevey]

I do have an account to do my accounts, but I just wanted to account for the above in my own bookeeping, which I haven't been keeping a Balance Sheet as I didn't understand them. Done some reading now and think I should be able to do one.