How to account for expenses in limited company

Discussion in 'Accounts & Finance' started by sultanoflondon, Jan 3, 2021.

  1. sultanoflondon

    sultanoflondon UKBF Newcomer Free Member

    18 0
    Hi all,

    I've made some expenses on behalf of my limited company using my credit card. How should I account for them in my limited company? My plan was to make a director's loan to my company by bank transfer, then simply transfer back each expense individually and the original director's loan will remain unaffected. How's that?

    Also, how do you account for expenses such as the working from home allowance of £6 pw in the company bank account? How about business mileage at 45p per mile? Or can my accountant just stick that on my tax return as a cost without it appearing on my bank statement?

    Posted: Jan 3, 2021 By: sultanoflondon Member since: Apr 12, 2020
  2. mattk

    mattk UKBF Newcomer Free Member

    2,461 900
    I simply keep a list of business expenses I paid for personally (usually train tickets, meals etc.) as well as business mileage and then at the end of every month I "submit a claim" to the company.

    For example, say I bought £200 worth of rail tickets and drove 200 business miles.

    I then transfer £290 (200 + 200 * 0.45) from my business bank account to my personal account, marked as "Expenses".

    I do the same for the £6pw, but as one transaction at the end of the year.

    Does your company not have any income? Why would you loan money to the company only to pay it back?

    In your situation I would simply add the cost of all your expenses to the director's loan account (as in the company owes you money) and then take it out when the company has the cash.
    Posted: Jan 3, 2021 By: mattk Member since: Dec 5, 2005
  3. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    13,349 2,508
    @sultanoflondon yes you can do that. What software do you use for your company bookkeeping? One way to record expenses charged to a directors loan is to create a bank account called directors loan and use that to record all payments and receipts but some software has other ways to deal with it.

    Again it depends on what software you use but you should record the costs.

    If your company is VAT registered and you dont use the Flat Rate scheme you can claim VAT on your business mileage.
    Posted: Jan 4, 2021 By: MyAccountantOnline Member since: Sep 24, 2008
  4. sultanoflondon

    sultanoflondon UKBF Newcomer Free Member

    18 0
    Thanks for your reply! At the moment, the company doesn't have any income, but your idea of adding the cost of all expenses to the DLA is a great idea, thanks!

    Thank you! At the moment, the company is new & so am I to running one, so I simply use Excel for bookkeeping and that's working well enough at the moment.

    Company isn't VAT registered for now, thanks for the heads up though!
    Posted: Jan 8, 2021 By: sultanoflondon Member since: Apr 12, 2020
  5. Oscar478

    Oscar478 UKBF Newcomer Free Member

    22 3
    I use my 'cash on hand' account for this. I upload receipts as expenses to COH, which ends up in the red each month. I then transfer that money to myself, and do an adjustment of the money from the main company account to the COH account.
    Posted: Jan 11, 2021 By: Oscar478 Member since: Sep 6, 2017