Owners Drawings Question?

[Newbie22]

A limited company with two partners;
Both have drawings every month of £2.5k as well as a salary, one partner is on a salary sacrifice scheme.
They also take £1k every month, they see this as a loan repayment, (which the business pays to them) as they borrowed money to buy the business etc.
There is a large order due to be paid shortly, and I think its been discussed that they will take £25k out of the business each. Is there any limitations on the amount of drawings they can take… The £25k each would still see the business okay and be able to run, with no major disadvantage to the business.
Also the £2.5 I know this is simple drawings… but what about the £1k although they see this as a “loan repayment” effectively it is owners drawings?
Feedback is welcomed! J

 

[elaine@cheapaccounting]

Drawings do not apply to a limited company.

In what capacity are you providing advice here?

 

[S-Marketing]

Drawings do not apply to a limited company.

In what capacity are you providing advice here?

Thats exactly what I was going to say, but knew if I did you would come on and tell me I was wrong.

 

[elaine@cheapaccounting]

Thats exactly what I was going to say, but knew if I did you would come on and tell me I was wrong.

I would only do that if you were wrong

 

[Newbie22]

I am not giving advice.. I just wondered what is the situation?

So drawings do not apply? Would it be a dividend payment then?

Also in terms of sage, the entry is credit bank, debit 7004 (Directors Dividends) but in the COA its under gross wages... surely thats wrong? Where would you recommend to show in P+L?

 

[S-Marketing]

I would only do that if you were wrong

Yeh, thats what you want me to think. I know you make stuff up sometimes just to make me look silly.

 

[elaine@cheapaccounting]

I cannot comment on if it would be dividends or a loan repayment without more info.

What is the directors account balance?

I would also not wish to comment on the level of dividends to recommend with proper review of the situation for tax planning purposes.