How do I account for personal drawings from a company and directors loans to a company in Reckon One??

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How do you account for directors personal loans to a company, and directors personal drawings from the company?
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CATHRINE

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Posted 3 years ago

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Michael Macleod

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You will need to set up accounts for each of the directors ie Director Loan-XYZ in Other Liabilities and a Drawings -XYZ in the same section (or you can charge drawings to the Loan Account) and you post to those accounts for any loans or drawings whenever a payment or receipt is processed

Michael m
Hi Catherine

Michael's suggestion is spot on, especially if the directors have put in lump sums of capital and it stays in the company. - drawings is usually an equity account, while the capital (Loan) is a liability.

However.... the but..... depends on what and how much you need to track from/to drawings, I have clients who live out of the company, sometimes 50 transactions a month, and then they buy stuff for the company from their own pocket or non tracked personal accounts or credit cards.

So I set up a bank or credit card account which can be used much easier for many transactions - you can call it whatever 'drawings to/from'  'Directors loan to/from.  If the bank transaction is for drawings, you simply write the cheque to 'drawings' & it tracks to the bank/ccard account with a memo. .. i.e groceries, soccer etc.

At the same time if they buy stuff for the company and want to claim it, you can enter the receipt from the drawings to/from account straight to office supplies, tools etc. this eliminates the need for jnl entries.

I would keep this type of drawings account separate from any lump sum Capital put in, as well.

** note, I always set up a sub account for drawings to track medical separately, and anything else the accountant my need to know, i.e. mortgage payments, building improvements if they own it.