Directors need to identify whether they owe money to the company or the company owes the director money. The transactions between the company and the director are (or should be) noted in the director’s loan account. This is NOT a bank account. This is a record of all the transactions between the director and the company i.e. salaries, PAYE tax and NI, dividends, drawings, funds introduced.
It was found in a recent LinkedIn poll that over 66% of directors did not know what an overdrawn directors loan account actually means.
if the director owes money to the company this means that the director loans account is overdrawn and this can have tax consequences. This is found in the company accounts in the balance sheets under debtor. If the company owes money to the director then the director becomes a creditor and this entry can be found in the balance sheet under creditors.
Watch our in-depth post event video for the full presentation on this topic.
Sean Davern - Forensic Accountant
Jesmin Rahman - Tax Investigation Expert
Marco Piacuadio - Licensed Liquidator