How do I record the business making a loan to the directors and their subsequent repayments?

Forum|Forum|3 years ago
November 2, 2022
1 reply
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Directors borrow a sum of money each year and pay back in monthly installments within 8 months

QuickBooks Online

Ashleigh1

Level 14

Hello Ruth@barlowfinan,

Welcome to the Community page,

So the loan needs to be a current liability or a non-current liability dependent on the length of the loan then you would need to do an expense to pay off the loan.

If you have a look at this help article it has all the steps you need to do to be able to record this in your account.

ruth@barlowfinanAuthor

But its the business making the loan to the directors, surely a loan taken out by the business is a liability not the other way around?

paul72

Level 6

Hi @ruth@barlowfinan

Yes - it's an Asset for the business.

As an aside - the company should be really careful regarding Benefit in Kind with this. Are the Directors paying interest on these loans? If not, HMRC would construe this as a taxable benefit.

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