Home – New Forums Starting your journey Do I pay myself back for capitol purchases?

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  • #988866
    TheGaz
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    Hi all

    I have recently purchased a courier franchise and have spent $50k plus on the run/area and a van. I took out a loan for this.

    I have also spent $4000 of my own money on work cover, insurance etc before I received a wage which I am now paying myself back through the company account as a Director loan repayment without GST.

    What I would like to know is do I also pay myself back the $50k I have invested for the run and van through the company to pay the loan or do I pay the loan from my wages only?

    Any help would be appreciated.

    Thanks Gary

    #1169325
    Past-Member
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    Re: Do I pay myself back for capital purchases?

    Hi, I am not the person to answer this.

    1. Perhaps you should clarify if you are a Pty Ltd or a sole trader.

    2. Have you got an accountant who can advise you on your initial setup?

    3. What software are you using for accounts? – there are many experts here with Xero, MYOB and others who can help advise you where to put the loan to the company figures.

    Otherwise here is the ATO link for business.
    https://www.ato.gov.au/Business/

    Tax topics A-Z at ATO
    https://www.ato.gov.au/A-Z-index/AZItems.aspx?sorttype=AZIndex&marketsegment=Business

    #1169326
    Webslice
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    TheGaz, post: 196295 wrote:
    What I would like to know is do I also pay myself back the $50k I have invested for the run and van through the company to pay the loan or do I pay the loan from my wages only?

    When you put the $50k into the company, did you create a directors loan in your company accounts? If so its my understanding its really up to you when this loan gets repaid.

    Just make sure that you actually do re-pay the loan or plan to soon.

    If you leave the liability there for a long time and decide to close the business, you can’t wind the company up without forgiving the “debt” which I believe would result in the $50k become taxable company income or a $15,000 tax liability at 30% tax rate (less dedications and pervious years losses being offset). So your company may have to pay tax on money you gave it when you forgive the loan. Hopefully you we’re talking to your accountant monthly if you were heading in this direction.

    My advice would be to make a separate payments on a different day for the “loan repayment” and make it separate to “wages”, because its important to pay yourself a wage, super etc and treat the loan like a bank loan.

    I’m not an expert so you should seek the advice of a licensed professional.

    #1169327
    ShellysBookkeeping
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    Is it a business loan or a personal loan from the bank. The type of loan and how it has been entered into your accounts, will in part determine how the loan should be repaid. I suggest you speak to your accountant for clarification

    Shelly

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