Totally overwhelmed.

Hello David,

You will need to make 2 bank accounts (making 3 total). One will be the credit card and the next will be the Directors Loan account.

This will allow you to enter the transactions on the credit card. E.g. you will make a bill and then pay it off with the credit card bank account on Clear Books. When you make the actual payment to the credit card, this will be a transfer from your business bank account to the credit card.

Likewise for the directors loan account. When you give money to the business, you will need to show it as a transfer from the DLA to the high street bank. This will single an injection of capital into the business which will be intended to be paid back in the future.

Let me know if you need further help.

Vanish

Hi Vanish,

Thanks for the reply. I took out a loan from the bank as a business loan. This was paid into my business account by the bank and then disappeared into various purchases, machinery etc. The monthly payments for this loan then went out of my business bank account.

I think I need some sort of account in clearbooks for the business loan from the bank, but how do do that? Is it income as there is money coming in to my account? But it doesn't count towards profit? Do I have to account for the loan interest separately?

Also it's unlikely I'll pay the cash I put into the business from my house sale back to myself, or should I account for it as a DLA? Will that affect my profit at the end of the year?

Thanks for your help David

Vanish is pretty much correct in his reply except it won't officially be a directors loan account because you're a sole trader, not a limited company. Come year-end you'll need to make an adjustment to this account to avoid there being any balance left within it.

Re the loan, you need to create a new loan account (also under the add bank account menu). You'll then transfer the loan from the loan account to the bank account to reflect the initial loan drawdown. From there on in, the monthly repayments will be transfers from business a/c to loan account, with the additional need to make a year-end entry to reflect the interest. A loan is not income by the way.

Feel free to keep the questions coming....

Kevin Platform Accounting

Thanks for the replies guys, I'm getting somewhere now, I think I have most of it set up and I'm now trawling through uploaded bank statements.

When I've used my business credit card to purchase personal items what's the best way to account for it? It's usually filling up the car for personal use.

I've been counting the transactions as 'loans receivable' so far, I read that this was the right thing to do. This has left me with an ever increasing number in my balance sheet and I have no idea what to do with it, or how it counts towards my profit (and ultimately my tax bill). Any advice would be helpful!

Thanks David

Transfer personal items to the 'DLA' you've set up (the one that's not really a DLA). Basically that account can be used to keep track of any money you invest into the business and anything you draw back out. As I say though, if you're going to use this approach you'll need to net the account off come year-end.

I must be honest, i'm not sure what you'd be using loans receivable for.

Thanks Kevin,

I'm not sure where I read it but last year I decided it was the right thing to do, I should have asked here first.

The problem now is that I have a lot of small transactions which are recorded under 'loans receivable', from multiple suppliers.

Is there any way to fix this?

Will I have to go through all of the imported statements, find all the transactions I've explained as loans receivable, then change them to transfers to the DLA?

Thanks David

What kind of transactions have you been analysing to loans receivable, personal items?

Yes, so it's my business credit card, In times of need I've used it for personal items, usually fuel for personal car

I think the idea was that I was borrowing money from the business and needed to pay it back at some point, thus loans receivable. It wasn't drawings and I needed some other way to record it. I don't see myself loaning anyone apart from myself any money through the business so is it conceivable that I use the loans receivable category instead f transferring to and from a DLA?

To save messing you're probably best just passing a one-off year end journal to clear the whole amount down.

Would you know how to to that? If not, let me know how much is sitting in loans receivable on your year end date?

Ps it was drawings technically.

Ok so any future personal purchases on my credit card I should record as drawings?

To complicate things further, When I have paid money back into my business account from my personal one I've recorded it as repaying some of the 'loans receivable'

That's meant to be transfers from the DLA again isn't it?

I've got 3 years worth of statements uploaded, about 75% explained, is it best for me to just wipe everything and start again or can I recover it?

Thanks Kevin I'm really grateful for the help. From now on when explaining the imported statements I'll record personal purchases as drawings, money introduced as capital injected (I take it this is a category I can select when explaining transactions?)

I'll carry on explaining statements. When I get to the end and generate some reports if I'm unsure of what to do with the extra numbers Ill find your email and get in touch, thanks for the offer.

Davida

Pleasure and yes, I'd certainly hope those categories are there already (posting from my phone so can't check for sure).

Hello there, I have a follow up query to the credit card scenario. I have a credit card account on Clear books, but I am only showing the payments (monthly, minimum) from my current account to my credit card account. So as far as clear books is concerned, the credit card account is a cash account racking up savings/cash at bank,

not sure how to then show the money paid off on the credit card over the year end, can I just do a one off payment from that account at year end to balance - is this what you mean when you talk about a one off journal, does it save the time of going through all the statements and recording each individual payment?

a thousand thank yous!

Hi Catherine

Are the payments to the credit card coming from your business account? If so, proper bookkeeping would automatically reflect these when importing the business bank statement. In a nutshell, done correctly the business bank account in Clear Books should match the actual bank statement provided by your bank. If you do that, the credit card will then sort itself out (unless you're paying it from another source of course).

hi Kevin, yes the payments to the credit card are coming from the business account. We don't currently import the bank statements, we manually input. Am looking to change this. Understood re the reconciliation. But the credit card "account" in clear books isn't reconciled, its just showing the payments accruing from the regular bank account..... that's my issue, does that make sense? cheers,

It does but in the same sense I presume the main bank account doesn't reconcile either?