How to correctly add personal cash as a loan to get my business started

Question asked by Tim Burgess 8 years ago

I've got some cash that i want to lend my new business to get it up and running as I need to make some capital purchases.

As i understand it from the book keeping point of view , i create a directors loan account , pay the personal cash into it , then transfer this to the business bank account. In reality just pay the cash directly to the business account. am I correct in saying this ?

there was a link on a previous post about this which linked to a help file https://www.clearbooks.co.uk/support/guides/chapter-11-directors-loan-account/

But this link is dead

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Hi Tim

Your first port of call should be to check with your accountant who can advise what the best way to put money in the business is. Assuming you go with the Directors Loan Account option, you can create one in CB by going to Money > Add Account > Directors Loan Account.

When the money hits the business bank account, you process this as a transfer from the Directors Loan Account to the Business Bank Account.

This will both reflect that there is now money in the business bank account, and the Directors Loan Account will be 'negative', meaning that the business owes money back to the director.

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8 years ago

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