Getting balance sheet to... balance?

Lukus

Hi all

Having a bit of a nightmare, not quite sure if missing the plot.

If I put £100 into my company, and I record this as a +£100 director's loan, then I subsiquently record a £100 expense (stationary, for example), when it comes to the balance sheet I have a negative value exactly equal to this?

Not quite sure how I am supposed to be appropiately accounting this?

This would seem OK to me (i.e. negative startup Loan that I won't repay until profitable) But HMRC & Companies house requires balance sheet be 'balanced' and therefore must match?

Erik

Hi @Lukus, there are a couple of different ways you could approach this.

One way would be to go through what you've done, which is to record the £100 loan separately as a deposit into your business bank account. This would allow you to keep track of this loan so that you can pay it off later. However, at this point, the money that is given to your business bank account is now, effectively, your business's. It can be used for anything you need it for, including your expenses. Because of this, any expenditures won't be directly tied to your loan. This money is the same as all of the other funds your business bank account has; it just came from a different source.

The other way would be connect an expense directly to your "Personal Funds", which doesn't record a loan. It simply says "This expense was directly paid for by a source outside of my business bank account". You can read more in our Help Center article on the topic.