Shareholding, director's loan account, bank account reconciliation

Question asked by Maria Ingold 10 years ago

Hi,

Still slogging through historical stuff. Clearbooks support couldn't help with this.

When I set up my account 3 years ago, I had a shareholding of: 1000 shares of £1 each. So I transferred £1000 in from my personal bank account to my business bank account. That then got allocated to a director's loan account. So the director's loan account had £1000 in it.

Then I reduced the shareholding to 100 shares of £1 each. So I transferred back from my business bank account £900 to my personal account. That reduced the amount in the director's loan account to £100.

I need to reconcile my bank statement.

  1. How do I reconcile my bank statment to say the above?
  2. Where do I demonstrate this money isn't just "physically" in my business account but in my "virtual" director's loan account?
  3. And where do I show my shareholding number of shares and value of shares and the historical allocation change?

Thanks again.

Kindest regards, Maria

Write reply6

6 Replies

Hi Maria - as mentioned by Kevin above, if the £1,000 was for shares there should be no DLA movement, more importantly though if the company was set up with £1,000 of issued share capital, did you go through the necessary legal steps to reduce it by £900, eg the resolution and statement of solvency? If not then there's every chance the share capital is still £1,000.

Best answer
10 years ago

Just to confirm I wasn't particularly suggesting an invoice be created, I was just trying to give a visual to the explanation.

10 years ago

Don't create an invoice.

Make a payment for £900 and pay the money to you. The other side of the entry is Share Capital.

10 years ago

Yes, I've found the formal Resolution to Reduce Share Capital. All done formally.

So, if I create an invoice to allocate my payment of £1000 for 1000 shares of £1 of share capital. What do I do to refund £900 when I reduce the share capital? Do I refund the invoice? Or something else?

Kindest regards, Maria

10 years ago

Clearsky Accountants supposedly did all of the necessary legal steps in 2012 for this. I am only logging historical records at this point.

10 years ago

If you're purchasing shares and you've physically transferred the cash in, the DLA wouldn't come into it. Imagine the scenario:

You've create an invoice in your own name analysed to share capital - i.e. the company has sold some shares to you:

file

You then simply pay the invoice in the usual fashion, crediting the funds to the business bank account:

file

10 years ago

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