Using personal bank account for business
- Thread starter Hubert B
- Start date
Solution
When this happened to us the accountants advised it happens all the time, as long as there's an invoice in the company system, just transfer the cash and match them both up.
We didn't add this to the self-employment computations for incoming earnings but we've kept a copy of bank statements (self-employed/company) and a copy of the Invoice.
This is what we were told to do - perhaps other accountants on here can advise if this was good info or poor advice?
We didn't add this to the self-employment computations for incoming earnings but we've kept a copy of bank statements (self-employed/company) and a copy of the Invoice.
This is what we were told to do - perhaps other accountants on here can advise if this was good info or poor advice?
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No. They didn't call it a personal loan. He simply paid the funds into the company bank account, we created an invoice in the company bank account and matched them both together. Job done.
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Yeah, that's what the accountant said. He advised it happens all the time and they make accommodation for that. As long as the money coming into the company account has a matching invoice - company accounts are cool. In the self-employment return we didn't refer to it at all as income. The accountant said if it was queried we could easily answer, show the evidence in the company account - job done. We put the accounts in last year, HMRC agreed them with no queries. So apparently, really is that simple.
I'd still like any of the accountants on here to answer if they take an alternative view, but that's what our accountant said.
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I don't think it's got anything to do with a Director's Loan.
The payment needs to be matched with the Invoice so that the Customer Account is correct. I agree with the Onthebrightside's solution which redirects the payment correctly to the company. It's just that the payment went on a temporary detour.
So that the reality is correctly recorded I would suggest that a copy of the relevant statement for the in and out transactions through the personal bank account should be kept on digital file in the company accounts and also, the original invoice with the incorrect bank details on.
It would also be sensible to check other invoices and especially invoice templates to make sure that the bank details are correct.
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The loan is created by virtue of funds belonging to the company being paid in (mistakenly) to the director's personal account. It is then repaid by transferring those funds to the company's bank account. If both transactions take place on the same/next day then I agree that it probably isn't worth bothering to record the loan but might be worth doing if the money has been sat in the director's personal account for a longer period of time.
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If it’s not a large amount, like thousands of pounds then do not worry about it. I would not transfer money as this would look more suspicious. Don’t worry, if it ever comes up ( it won’t unless your talking massive amounts) tell them what happened
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I've only just spotted your post so its maybe a bit late to reply but how much is involved.
Has your accountant fully explained the tax implications of a directors loan?
I suspect most accountants will have seen clients doing this - it's not advisiable though.
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