So many business owners end up out of pocket because of mis managed Directors Loan Accounts. Here are four tax and money saving tricks you can implement to make your Directors Loan Account work for you.
If you have borrowed money on behalf of your business to get it up and running or out of a tricky cash flow situation, then you can charge your business interest.
Check out tax implications rules around the rate of interest you can charge here.
All the little expenses you pay for out of your own money add up. Not only does this leave you out of pocket but you also don’t really understand what it takes to run your business.
Download my expense claim form and log everything on a monthly basis, as part of your month end routine.
Expense Your Salary from Day One
Even if your business is in a place where it cannot afford to pay you a salary, you can expense one anyway. This can be added to your Directors loan account.
If you are working in the business it makes sense to reflect an amount to cover your salary in the accounts.
Don’t go overdrawn
An overdrawn directors loan account attracts interest and tax charges for you and your business. So don’t go there.
If you are drawing money out of your business without it going through payroll or being matched to expenses then be careful. Keep your books up to date and an eye on your directors loan account balance. Ultimately you may have to pay it back to the business or face writing it off as a last resort.