As most owners (shareholders) of close companies will know, there are lots of transactions between owner/managers (directors) and their limited companies. These transactions are recorded in the Director's Loan Account.
This article deals specifically with directors using personal bank accounts not in the Limited company name for business transactions.
Paid by director personally
In your Crunch account, you have the option to record an expense that was paid by a director personally - this means that the expense was paid from the director's personal funds. This payment could be in the form of cash, cheque, debit/credit card or any other payment method where the money doesn’t come from the business bank account.
These expenses are classified as "director's expenses".
The term “paid by director personally” in your Crunch account does not mean that the director paid for the expense in person using the company account. This should be recorded as being “Transfer out from company account” - for example, if the payment was made as an electronic transfer.
If a director pays for a company expense personally, their director's loan account becomes smaller, as the director is owed more money.
To see a list of all expenses paid by the director, navigate to the Expenses screen, click on Expenses, then on the drop-down menu for Payment method and select the filter Paid by director personally.
Find out how to withdraw the money owed to a director by the company.
Received by director personally
Just as you can pay for something out of your own money, it’s also possible to receive a client payment into your own personal funds.
To see a list of all income received by the director, navigate to the Sales screen, click on Client Payments, then on the drop-down menu for Payment method and select the filter Received by director personally.
For interest received personally, navigate to the Banking screen, select Interest Received and select Received by Director Personally under Payment Method.
If a director receives a client payment into their own bank account, their director's loan account becomes larger, possibly overdrawn. This is because the director owes the amount they received personally to the limited company.