Limited Company - Initial Funds?

[Dave0108]

Hi Forum,

I was wondering about the process of getting initial funds when a Limited Company is first formed. Obviously the money has to come from somewhere, so to keep things simple we have a scenario where the company has 1 director and that same director is also the one and only shareholder.

For instance the director transfers £10,000 from his own personal bank account to the business bank account of the Limited Company. So that would be formally viewed as the Limited Company taking a loan out from an individual?

Obviously at this point the company will have £10,000 under liability and will need to pay the money back in the future.

Now I have some questions:

1. Is that loan then an allowable expense for the limited company, in terms of paying it back over time?
2. How will the loan be logged in terms of the directors self assessment (SA100)?
3. How will the money that is paid back to the directors personal account be logged with HMRC? To keep things simple the loan will be with 0% interest.

If someone can answer these questions, I would greatly appreciate it.

Thanks

 

[john1989]

If the loan is interest free..

It will be a credit to the directors loan account within the company.

It is not an allowable expense for the company ... the company would have an asset of £10k and a liability of £10k.

It won't be recorded in the directors tax return.

 

[SBlundell]

I don't think anything further can be added than that!

 

[LWDesignCo]

Following on from Dave's question, can I put the cost of what I spent and include that as part of the director's loan to my company so that I can get that money back at a later date?

For example:

Formation costs using an agent
Registered business address annual cost so I don't have to use my personal address
Cost of equipment such as a printer

All of these purchased a week prior to the actual incorporation date but for the sole purpose of the company.

 

[Scalloway]

Yes you can put these through your director's loan account. Formation costs are not tax deductible.