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  • #987682
    rthorntn
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    Hi,

    Such a great forum, thanks to everyone that’s helped me in the past!

    When my business was younger it didn’t have any money of it’s own so I paid for a bunch of stuff (company formation, embroidered shirts, furniture, printer, mobile phone, projector…) with my own personal cash and credit cards, making sure I kept receipts.

    With the tax year ending I want to get all of this in to Xero but there is no bank transaction to reconcile ;)

    I assume this is a common problem with startups.

    I have had advice previously and as a result I created a “loan from me” liability in my chart of accounts, which I haven’t used yet.

    I am not sure when I will be able to pay myself back, probably not before the end of the tax year.

    Can somebody please describe the steps I would take in Xero to input these liabilities?

    Thanks.

    Richard

    #1163785
    Simply Money Honey
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    Hi Richard

    I use Saasu instead of Xero but the way I do it is to set the loan account up as if it were a bank account. Then add the purchases and in the payment section put that they were paid via “Director Loan”.

    Hope that helps.

    Gabrielle

    #1163786
    FalzonFinancial
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    rthorntn, post: 189621 wrote:
    Hi,

    Such a great forum, thanks to everyone that’s helped me in the past!

    When my business was younger it didn’t have any money of it’s own so I paid for a bunch of stuff (company formation, embroidered shirts, furniture, printer, mobile phone, projector…) with my own personal cash and credit cards, making sure I kept receipts.

    Richard

    Richard,

    For expenses paid from personal funds these can also be coded to Owner Funds Introduced in Xero. This is a capital account on the same side of the general ledger as your loan and would be more accurate.

    Hope this helps.

    #1163787
    Rhys
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    rthorntn, post: 189621 wrote:
    When my business was younger it didn’t have any money of it’s own so I paid for a bunch of stuff (company formation, embroidered shirts, furniture, printer, mobile phone, projector…) with my own personal cash and credit cards, making sure I kept receipts.

    With the tax year ending I want to get all of this in to Xero but there is no bank transaction to reconcile ;)

    I have had advice previously and as a result I created a “loan from me” liability in my chart of accounts, which I haven’t used yet.

    Can somebody please describe the steps I would take in Xero to input these liabilities?

    Richard

    Hi Richard,

    Xero has a couple of great tools to make this easy for you.

    You have already done the first thing, which is to create a “loan from me” account (this should be a current liability). Make sure you have ticked the “enable payments to this account” (Xero help for this here)

    Next step is to put all of your expenses into Xero as an expense claim – under the accounts menu you’ll find an option for expense claims, guidance for using this here.

    If you’ve got lots of these to enter consider using one of the add ons such as Receipt Bank, which will allow you to scan the receipts in to make the whole process much quicker – whatever you load through Receipt Bank will automatically sync to Xero.

    Once you have all of your expenses in you can “pay” these out of the shareholder loan account. Details of how to do this included in the Expense Claims help pages.

    The result of all this will be that:

      The expenses will be in Xero as a deduction for tax purposes, also Xero will calculate the amount you can claim back as GST paid (watch out if you have already lodged one or more BAS, you will need to enter these expenses into the current quarter or lodge an amended BAS for earlier periods).
      The business will now have a liability, being money owed to you. When you have sufficient funds in your business you can pay this amount back to yourself (this payment will have no GST or other tax implications, it is just a repayment of a loan.

    I hope this all makes sense, feel free to give me a call if you need any further assistance with this.

    Cheers, Rhys

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