Paying a wage to a directors loan that is an asset account

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  • Updated 1 year ago

Hi everyone! I've just started back to bookkeeping after a rather large break and am stuck on something!

I have a director of the company I work for, who wants his wages to be put back into his directors loan. The loan is set up as an other asset account. (He started the company with a positive figure in this account. He has since lent money to the business from it, and so it is now zero balance). So he wants his wage each and every week to go into this account. I am bamboozled as to how to do this. I originally set up a clearing account and had his payroll run into their so I could transfer to his loan account, but it then goes into the loan account as a negative figure! How can I get that wage to go into the loan account as a credit, whilst still showing on the main account journal that the wage has been paid, but not taken out (so a credit against that debit)? He definitely wants it set up in payroll, so I have no option to do it another way. Any thought?

I am using Reckon Premier 2017 by the way!

Thanks for reading! Have a great day!

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Linda Taylor

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Posted 1 year ago

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Very Easily done and quiet common practice , i do this for my clients as their engaged Tax agent.
May i also suggest you should discuss with the engaged Tax accountant.  Not a good idea to advice on these matters as it encroach DIV 7A loan implication, but in you r case you will have a credit loan balance, should not be an issue.
How ever , there will be lots of advice coming to you from this forum ,strongly advice to seek advice from your TAX AGENT as he will be accounting this loan in the Tax Return
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Linda Taylor

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Thank you for your reply! Yes I have advised to discuss with their accountant to make sure that paying the wage into their loan accounts is the best option for them.
I'm just stuck on how to actually go about doing the transaction? Are you able to shed some light on that at all?
Thanks in advance.

Linda
Ok call me on 0407068942 when you feel ok
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Linda Taylor

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Oh dear! It must be involved if too much to message. When are you available?
Ohh sorry call me tomm at say 9 30 am pls
0407068942
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Linda Taylor

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It might be a little later in the day if that's ok? I have a meeting in the morning, but will call in the arvo if ok with you?