Been using my ltd company card for all types of purchases

[Matthew J]

I think I may have made a bit of a mistake.

I have been buying many types of persoanl items with my company card as well as using it for company expenses.

Whne it comes to reporting, am I going to get in trouble? I would not try and claim these personal items as company expenses, but will Companies House mind that ive done this? If so, what should I do. I have an Excel spreadsheet with my minimal salary, dividends and expenses but the transaction list on the card is obviously confusing now.

Thanks guys

 

[MOIC]

Step 1. Make a list of all personal purchases not connected with the business.

Step 2. Speak to an accountant, although there will probably be sufficient advice from people in the know on this forum.

 

[UK Contractor Accountant]

I think you will find its all NICable.

 

[NicoJ]

I think you will find its all NICable.

Why? Wouldn't it just be DLA or am I missing something?

 

[UK Contractor Accountant]

Is he/she/it a Director? do we know that.

yes normally would put to loan account and square up with a dividend declaration to clear ( assuming a shareholder as well).

The other way to look at it ..... the company has settled a pecuniary liability of the employee which is subject to NIC & P11D disclosure.

Take your pick.

 

[Matthew J]

slightly bamboozled now but thats normal.

Im the sole director of the company.
ive been paying myself £120 a week as a salary.

I started a company in October last year and had a contract with a company up until middle of March this year, i have continued to pay myself £120 a week and will continue to do so.

As I haven't got a new contract yet, the expenses of the company are mainly the director salary The income from this first contract will be substantially used up paying this; anything left will be seperating the personal expenses from the business expenses and then leaving an profit (which is not gonna be much at all now).

The issue is, apart from recording it all in an Excel sheet, I can't really show it in statement transactions and transfers on my bank account statements that Ive been paying myself this.
Ive just been using my business card much like a normal card with the plan to sort it all out nearer my company tax return date (sort it out, meaning to divide everything into personal, business and taxable accounts).

I guess what I'm asking is do companies house ask for bank account statements? If not, then I can seperate everything and submit.

But now Ive been told that as a director I also have to submit a personal tax return..is that correct? If so, then Im off to put my head in a pot of boiling water.

 

[NicoJ]

slightly bamboozled now but thats normal.

Im the sole director of the company.
ive been paying myself £120 a week as a salary.

I started a company in October last year and had a contract with a company up until middle of March this year, i have continued to pay myself £120 a week and will continue to do so.

As I haven't got a new contract yet, the expenses of the company are mainly the director salary The income from this first contract will be substantially used up paying this; anything left will be seperating the personal expenses from the business expenses and then leaving an profit (which is not gonna be much at all now).

The issue is, apart from recording it all in an Excel sheet, I can't really show it in statement transactions and transfers on my bank account statements that Ive been paying myself this.
Ive just been using my business card much like a normal card with the plan to sort it all out nearer my company tax return date (sort it out, meaning to divide everything into personal, business and taxable accounts).

I guess what I'm asking is do companies house ask for bank account statements? If not, then I can seperate everything and submit.

But now Ive been told that as a director I also have to submit a personal tax return..is that correct? If so, then Im off to put my head in a pot of boiling water.

To answer the 2 questions you've asked here - no CH will not look at your bank statements.

In regards to the tax return, it depends on what income you've taken as to whether you need to complete one or not.

 

[STDFR33]

In regards to the tax return, it depends on what income you've taken as to whether you need to complete one or not.

Or whether or not they’ve been issued a notice to file.

 

[MyAccountantOnline]

slightly bamboozled now but thats normal.

Im the sole director of the company.
ive been paying myself £120 a week as a salary.

I started a company in October last year and had a contract with a company up until middle of March this year, i have continued to pay myself £120 a week and will continue to do so.

As I haven't got a new contract yet, the expenses of the company are mainly the director salary The income from this first contract will be substantially used up paying this; anything left will be seperating the personal expenses from the business expenses and then leaving an profit (which is not gonna be much at all now).

The issue is, apart from recording it all in an Excel sheet, I can't really show it in statement transactions and transfers on my bank account statements that Ive been paying myself this.
Ive just been using my business card much like a normal card with the plan to sort it all out nearer my company tax return date (sort it out, meaning to divide everything into personal, business and taxable accounts).

....

Excel sheets aren't really enough to maintain proper accounting records for a limited company.

My advice, as well as get yourself a good accountant, is to get some good accounting software and record the company transactions properly.

You really aren't the first person to have started in this way but do get it sorted now.

What you have to bear in mind is that you and your company are separate legal people and every time you use company money it has to be properly accounted for - you cant just spend company money like it's your own and that includes spending on the company credit card.

Do you know how much private expenditure the company has paid for you so far?

 

[NicoJ]

Or whether or not they’ve been issued a notice to file.

Yes, sorry I missed that out.

Agree with Nicola as well. I think it's often seen as a "cop-out" answer on some of the forums to advise that you appoint an accountant but it genuinely is the best advice.

 

[mattk]

ive been paying myself £120 a week as a salary.

Do you transfer £120 a week from your business bank account into your personal bank account - or have you simply been buying up to £120 a week of personal items on your company card?

 

[Matthew J]

Or whether or not they’ve been issued a notice to file.

No I havent. The only income I have is from the business. Does that probably mean no?

Excel sheets aren't really enough to maintain proper accounting records for a limited company.

My advice, as well as get yourself a good accountant, is to get some good accounting software and record the company transactions properly.

You really aren't the first person to have started in this way but do get it sorted now.

What you have to bear in mind is that you and your company are separate legal people and every time you use company money it has to be properly accounted for - you cant just spend company money like it's your own and that includes spending on the company credit card.

Do you know how much private expenditure the company has paid for you so far?

I did have one but they disappeared. So Im now trying to figure out as much as I can before paying a new one.

Private expenditure? As in tax exempt expenses? Yes, I have all the weekly payments and business receipts collected and collated in Excel.

Do you transfer £120 a week from your business bank account into your personal bank account - or have you simply been buying up to £120 a week of personal items on your company card?

No I havent done that, thats my issue, ive been using the business card to "buy up" my salary.

Thanks so far guys

 

[mattk]

No I havent done that, thats my issue, ive been using the business card to "buy up" my salary.

You really need a clear separation between the business and your personal finances.

Are you planning on preparing your own accounts, as I think an accountant would have kittens when they see your bank statements are a mixture of business and personal spending.

Going forwards you need to transfer the money out of your business account and into your personal account. Record this as salary in your records. I assume you're not doing PAYE if it is only £120 a week?

 

[ecommerce84]

I assume you're not doing PAYE if it is only £120 a week?

Should be if it’s £120.

From HMRC: “You do not need to register for PAYE if none of your employees are paid £120 or more a week, get expenses and benefits, have another job or get a pension.”

You might need to take a pay cut to £119.99!

 

[numbersrule]

Why? Wouldn't it just be DLA or am I missing something?

I agree with NicoJ.
You just need to make an accurate list of all the personal expenditure and treat it as a Director's Loan from the company.
Then that means you pay it back to the company.
A single payment to cover the full total of all personal expenditure on your list including VAT.
Then your company accounts can show that the Director's Loan has been paid off to a zero balance.
Are you in a position to have the personal funds to pay back the company?

 

[TheCyclingProgrammer]

I agree that the simplest way to fix this would be to collate all of the non-business expenditure and record it as a directors loan and get that paid off ASAP.

The simplest way to square up the director loan account is to declare a dividend and credit the amount to the DLA however in order to declare a dividend you need a) there to be enough profit available and b) evidence that there is sufficient profit available - management accounts or some kind of bookkeeping system that shows you your company position in real-time, which it doesn't sound like you have.

Besides this, you also need to get your remuneration plan sorted out - if you want to pay yourself a salary then you need to deal with PAYE. If you want to pay yourself dividends then see above.

I highly recommend you engage the services of an accountant to help you sort this mess out.

 

[Lisa Thomas]

I agree you should get an accountant - if more mistakes are made this could be quite costly.