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directors loan account

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Natalie123

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Mar 26, 2010
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Hi everybody, i wanted to know, if a limited company pay £5k to a director in a business and at the year end, assuming there is profit after tax of £20k, will the accountant deduct this loan amount from the profit or does this sit in the balance sheet as Directors loan.
 
It depends what the £5,000 is - is it a loan, a repayment of an in credit loan account, a bonus or a dividend.

If the latter 2 it's a P+L item, the last one being post tax, with the other pre. If it's one of the first 2 then it avoids the P+L altogether.

Your accountant will advise you which is best.

Regards

Kevin Lucas
 
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Natalie123 said:
Hi everybody, i wanted to know, if a limited company pay £5k to a director in a business and at the year end, assuming there is profit after tax of £20k, will the accountant deduct this loan amount from the profit or does this sit in the balance sheet as Directors loan.
Click to expand...

Some accountants will transfer dividends to clear a directors loan account at the year end but its not the way I like to work.

I encourage clients to prepare or have prepared management accounts so that they can see what level of profits have been made and pay dividends accordingly.
 
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MyAccountantOnline said:
I encourage clients to prepare or have prepared management accounts so that they can see what level of profits have been made and pay dividends accordingly.
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Our fee on line system produces mang accounts plus a dividend projection :)
 
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elainec100@cheapaccounting said:
Wow - didn’t realise you have got a free on line system now Nicola. Great stuff. Good to see others joining the on line revolution.

What do you use?
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We dont insist clients use any package - it depends on the clients exact requirements.
 
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