Director's loans

How to record money received as a loan from a company director and repay the loan and interest in Accounting Start.

Create new categories

Before recording the director's loan, create two new categories for the loan amount and interest paid using these details.

Name	Category code	Type	VAT rate
Director's loan	2300	Current liability	No VAT
Director's loan interest	7301	Overheads	No VAT

1. From More, choose Business Settings.
2. Select Chart of Accounts, then New Category.

3. Enter the details and Save.

Record receipt of the loan

Record the loan payment into your bank account using the new Director's Loan category.

There are two ways you can do this:

1. Create a new receipt from your bank feed or bank statement import each month.
2. Manually enter as Money In. If you're using bank feeds or importing from a bank statement, simply match it with the receipt.

Using bank feeds or importing your bank statement

When you process your imported bank transactions:

1. Select the new Director's Loan category from the What dropdown list.

2. Select Create.

Manually create bank transactions

1. From the Banking tab, choose New, then Money In.
2. Enter the details such as the date, amount received and a relevant reference.
3. Enter the total amount of the loan and choose the Director's Loan category. Don't record any VAT. 

Record the loan repayments

When you record the loan repayments, select the new Director's Loan category. This reduces the balance of the loan on your balance sheet. Record the interest payments to a separate Interest Paid category. The interest payments appear on your Profit and Loss Report.

There are two ways you can do this:

1. Create a new payment from your bank feed or bank statement import each month.
2. Set up a recurring bank payment. If you're using bank feeds or importing from a bank statement, simply match the payment for each period.

For example, if the loan repayment is £95.83 per month, it's split into £83.33 for the loan principal and £12.50 for interest.

Using bank feeds or importing your bank statement

When you process your imported bank transactions:

1. Select the split icon.

2. On the first line:

   • Select the new Director's Loan category from the What dropdown list

   • Enter the net amount of the repayment. In our example £83.33

3. On the second line:

   • Select the new Interest Paid category from the What dropdown list

   • Enter the interest amount. In our example £12.50

4. Select Create.

Create recurring bank transactions

Use this when you don't have a bank feed and don't import your bank.

1. From the Banking tab, choose New, then Money In.
2. Enter the details such as the date, total amount paid and a relevant reference.

3. On the first line:

   • Select the Bank Loan category

   • Enter the net amount of the repayment. In our example £83.33

4. On the second line:

   • Select the Interest Paid category

   • Enter the interest amount. In our example £12.50

5. Select Save.

Make the repayment recurring

1. Edit the bank payment you've entered.

2. Select Make Recurring, then complete the following:

   • Repeats every - Specify the frequency (days, weeks, or months) for the transaction to repeat. For instance, to repeat payment every ten days, enter 10 and select "Days" from the dropdown

   • Repeat until - Enter the date of the final payment