Re: Employee Expenses

On 26 Nov, 13:21, "desperad...@xxxxxxxxxxxxxx"
<heydude78...@xxxxxxxxxxx> wrote:
On Nov 26, 12:39 pm, Ronald Raygun <no.s...@xxxxxxxxxxxxxxxxxxxxx>
wrote:

I just add this to the normal Debtors section in the P&L then?
Yes, but not quite, because a loan to a director is rather an "abnormal"
debtor.

Also, the debtors section is in the balance ***, not the P&L.
The distinction will become clear once you get around to digesting
Frank Wood. :-)

I was actually staring at the Balance *** when I wrote it :-)

There are no tax implications?
Not for the company, but for you personally it represents a benefit
in kind in terms of the interest you would have had to pay if you had
borrowed the money elsewhere than from your company. If it wasn't
outstanding for very long, it may be insignificant enough to sweep
under the carpet.

That would be declared on either the P11 or P35 as a benefit in kind?
How would I calculate this (that's a separate question from the thread
I suppose and I could ask that later!).

It only has to be declared on the P11D if it is £5,000 or more.

OK, so you owed the company £2.5k as at 31 Aug 2006.

Yes.

During the 2006/07 year you repaid your debt by claiming travel and other
expenses. That's perfectly OK (and the bookkeeping entries will just be
[Dr Expenses, Cr Director's Loan] instead of [Dr Expenses, Cr Bank]).

The bookkeeping entries have already been done in the software. I''m
assuming I can just DR Expenses and CR Director's Loan for the amount
outstanding on 31/08 with a date of 31/08?Also I don't have a
Director's Loan account in the software (I have a Shareholder/
Stockholder Loan (Current Liability) and Distrib-Practice Loan
(Equity) neither of which I think I could use!) so I would need to
create one. What type of account would it be? Anything else special
about it (software wise)?

If a default account is not exactly what you want you want to set a
new one up.

But if part of the expenses you claimed in early 2006/07 were in fact
incurred before 31 Aug 2006, then ideally they ought to have been put
through the 2006/07 accounts as accrued expenses, and would have served
to make the balance you owed the company at year end less. Or did you
already claim any expenses due for 2005/06, and the £2.5k you owed the
company was the balance after deducting what the company owed you?

As far as I can see it's actually all been reclaimed. If there is
something missing it is likely to be a small amount.

Did you not still have your old accountant deal with 2005/06? What did
he do with all this?

The accountant that dealt with 2005-2006 was the last one who 'wasnt
really an accountant'. He therefore didn't do anything with it (I
can't see it anywhere - there is no Directors Loan listed or anything
matching the amounts I have).

Most likely he didn't know that some of the fuel payments were for
private fuel.

The reason these expenses are not being paid to and from the business
is a lack of money on my part and a lack of money on the business
part. I'm not going to go into the long details of it, but suffice to
say when the business and I moved here last year things changed
dramatically. That may not be relevant but I thought I'd answer what
everybody is no doubt thinking.

Fair enough. Now that the company owes you for expenses, and if that
was the situation at 31 Aug 2007, those expenses *should* go in the
P&L as Peter said, and show your director's loan account as a creditor.

Can I continue to use the employee 'bank' account in the software for
my personal expenses (the reason I setup a 'bank' account within the
software for my personal expenses - when paying purchase invoices in
the software it only allowed you to 'pay' the invoices using a bank
account - I setup the employee bank account for myself and paid the
invoices from that) and then move the debit or credit to the Directors
Loan account at year end?

You may as well just have the "bank" account as the Directors Loan a/
c. You don't need to move it at the year end. You just remember it is
a Creditor in the accounts.

My intention is no that things are more under my control and I'm not
leaving the accounting to others is to get a grip on things like this
and deal with them 'properly'. Can you tell me what a 'normal' way of
dealing with these expenses would be?

For genuine expenses, i.e. money you advance personally for business
spending:

When the expenses are claimed:

Dr Expenses (P&L)
Cr Director's Loan (B/S)

When the company has the money to pay you:

Dr Director's Loan
Cr Bank

For non-expenses, i.e. money the company advances for your personal
spending:

Cr Bank
Dr Director's Loan

When you repay it other than by claiming genuine expenses, i.e. if you
were to repay part of the loan in cash:

Dr Bank
Cr Director's Loan

Thanks for that - saved for future!
.