Directors spending

[charlenebb]

Hope someone can help me with a bit of advise. I prepare accounts for a ltd company. There is only the director and no other employees. The problem is the director uses the business account to do all his spending and receive his sales etc. He also uses his own personal account to transfer money in and out between the business account and his personal a/c.

All the receipts he gives to me (usually every other month) would not tie into the business bank account as sometimes he uses his credit card/personal account/business acccount. Trying not to make this to long. I use sage accounting package and just wondered if the best way to treat this is to set up a account under liabilities in the balance sheet and charge all expenses to P& L dr and liabilities cr and all payments made out of the bank account (for expenses) to bank account cr and liabilities Dr along with all transfers in and out of the account. This then would show if he owes the company money or the company owes him. Any advise is welcome.

The reason I thought I should do this is that even though I also do the payroll each month (all is well on this side). I do not pay his wages out of this account as he just uses whatever account he wishes. Any advice on this would be good as well.

Sorry to go on

[Poodle]

Hi

When faced with this I change the name of one of the unused bank accounts in the company to Directors Loan. It has the same effect as having a separate DLA on the balance sheet but it is easier to process these types of transactions.

For payments in and out of the company's bank account you process these as transfers.

Business payments from his private account or credit card are treated as bank payments to the appropriate bank account.

When you process the payroll each month just process a payment from this account as well to Directors salary/ remuneration which ever you use.

If you do this and keep all vouchers in a separate file you should be able to keep a clean audit trail ready for inspection if necessary an a record of what is owed to or by the director at any given time

Poodle

[charlenebb]

Thank you so much for the advice. This is how I was going to also treat the salary.