Using the Director's Loan Account in Xero

[@MrQWUK]

Great video, thanks. It's been over 10 years since I did any small business accounts (it's not my main job, just a necessary 'evil') and that was with Sage with assistance from my accountant at the time. Really liking Xero but couldn't quite work out how to do the Director's Loan stuff and this was spot on to give us the information needed in the early days.

[@XUSolutions]

Glad it was helpful!

[@jeffrey8154]

Side note: You have the best Xero videos on KZbin hands down.

[@XUSolutions]

Thank you, I try my best :-)

[@tonia5364]

Hi Marion. When you pay for an invoice using the DLA, where are the actual funds being credited from to pay the bill? I understand that the DLA will be Credited and therefore create a liability to repay the director, but where are physical funds being credited from to actually pay Vodafone? Hope I’m making sense? Thanks x

[@chipedzalusinga6849]

You really "keep it simple " ....great quick videos . Well explained

[@XUSolutions]

Glad you like them!

[@JanosFeher]

This is a very useful video, thank you! I'd recommend to adjust the title a bit like "Using the Director's Loan Account to allocate share capital and to record personally paid items in Xero" or similar. In the video you cover the case when a director paid a purchase invoice from her own pocket which can be recorded as a "bill" paid from the Director's Loan Account.

[@XUSolutions]

Great suggestion!

[@Tastygarybites]

A massive help thank you so much , trying to do my first year accounts for my Ltd company with zero , do you have a video for that 😅

[@martinarobinson1819]

SO Helpful - thank you so much

[@XUSolutions]

You’re welcome

[@lisapethick2613]

Really helpful - thank you. well paced and easy to follow.

[@XUSolutions]

You're welcome!

[@TT-nh7rx]

How do I add pre business start up purchases into xero? I used my personal bank/credit cards. I’ve been told I’m not supposed to add personal accounts to xero as they’re not business accounts. I did try but it wouldn’t work.

[@garyfowler715]

Really useful video, thank you very much.

[@XUSolutions]

You are welcome!

[@mohammadaqib4019]

Thank you for sharing this information

[@XUSolutions]

Glad it was helpful!

[@charlottenuttall6852]

Thank you for this helpful video. I watched a video you produced on items paid for personally. I followed the instructions and entered the transaction into the manual journal, going in as a debit and then coded as a directors loan credit. If you then transferred the paid for personally item amount back into your personal bank account how do you code this transaction when you reconcile ?

[@XUSolutions]

You simply code the payment to the director’s loan reducing the liability - ie the company is now due to repay the director less. If that was the only DLA transaction then the DLA would be nil after the repayment.

[@charlottenuttall6852]

Thank you, I did read this in one of the other comments but just wanted to double check.

[@scotttemple-farmer3501]

great help, thanks.

[@XUSolutions]

You're welcome!

[@killahills10304]

Great video thanks for sharing! I am wondering if you can help me. I have a limited and my partner and Mother helped finance my first year. Do these payments go into the DLA or should each loan have their own DLA?

[@XUSolutions]

I would recommend that director's have separate loan accounts. And if they are not company directors, still create a loan account and name it 'Loan from XXX"

[@mikeschollar]

Hi Marion, how would I go on with an existing directors loan and inputting that when setting the company up on Xero? Obviously the funds have already been out laid to the company for several years therefore the transaction in order to reconcile the directors loan won’t exist.

[@XUSolutions]

Hi Mike, you would enter the amount as an Opening Balance in Xero. These are referred to as Conversion Balances and you will find them in Accounting Advanced Conversion Balances

[@patricialife6803]

very useful but what about if you don't have a business bank account yet?

[@XUSolutions]

Then you would leave all the transactions in the Directors Loan Account

[@Warmfuzzymedia]

Good but how do you deal with cash items paid by the 'director' :)

[@changhazi]

I have a question that if Director invest in company then we can debit bank and credit capital account simply.? but why directors loan account created and and adjusted to capital account in seperate entry. ?

[@XUSolutions]

You would use the loan account if the shares were not actually paid for. If payment was made what you suggest is correct.

[@faridamutiara2094]

Hi I found your tutorial is very helpful, just one question please, I hope you wouldn't mind to answer, as I'm still a little bit confused about this: is it still correct, if I create 2 accounts for the directors loan? for example: 635 Loan to Director (Current Asset) and 835 Loan from Director (Current Liability) ? or I just need to add one, 835 Loan from Director (Current Liability) only (like in your video) thanks

[@XUSolutions]

Hi Farida, one account is enough to record all transactions

[@ministermusic6677]

This is very informative video. Like it very much

[@XUSolutions]

I'm glad you liked it

[@ministermusic6677]

Can you please email me on [e-mail] so that I can send you the excel sheet in which I narrate you the problems while reconciling the VAT so you can refer to that & prepare your next video on VAT reconciliation. Awaiting your valuable response. Thank you

[@XUSolutions]

If you want further help with Xero, check out my online courses here www.udemy.com/user/marion-thomson/

[@balazssallai1084]

Hi Really nice and useful video. I have a question. How can I post bank charges against Directors Loan? What is the best way? Thanks

[@XUSolutions]

You can enter a manual journal, debiting Bank Charges and crediting Directors Loan.

[@nezamsohel467]

THANKS

[@XUSolutions]

You're welcome!

[@Kacili_McKur]

Hi thanks for the video it was very helpful. I have a question however... if the directors have now been repaid and the directors loan account is back to 0, how does the company lend money to a director and where can i find a video on that process? Thanks

[@XUSolutions]

I don't have a video showing a director borrowing money from a company as it's not recommended practice.

[@Kacili_McKur]

@@XUSolutions Says who? It's one of several acceptable ways to withdraw money from your company and people should be taught how to do it properly.

[@XUSolutions]

Sorry it’s not on my list to do but I’m sure you can get help elsewhere.

[@XUSolutions]

Which country is your company in Korrin?

[@Kacili_McKur]

@@XUSolutions The UK

[@rllm561]

Thanks so much this was really helpful - do you have a video on how to handle customer returns i.e. what to code it as :) many thanks

[@XUSolutions]

Hi, you should code any returns to the same code as the original transaction.

[@rllm561]

@@XUSolutions Thank you so much for taking the time to reply!

[@XUSolutions]

@@rllm561 you're welcome

[@depfeffel6455]

Really nice video, thank you

[@XUSolutions]

You're welcome :-)

[@hollieharker8607]

I'm not starting out but migrating over from sage to xero. I have 18,235.24 in my business as a directors loan. How do I put that in directors loan without putting it through the bank

[@XUSolutions]

Hi Hollie, this would be dealt with in your conversion balances.

[@raztaxaccountantsltd1529]

Hi i need your help for journal entries through bank reconciliaton \

[@XUSolutions]

You cannot enter a journal entry to a bank account

[@wafaben6243]

Is the Direct loan account a liability? it's capital introduced by the owner of the business so increase the capital account. I am confused... anther concern is about the share capital account which is usually CR to increase stockholders' equity section. why should the owner pay £ 100 for shares? please someone can help me, thank you

[@XUSolutions]

If the company is owe the director money, then it is a liability to the business. The company is a separate legal entity to the shareholder/owner, so the owner is legally obliged to purchase any shares held in the company.

[@GaryBrown-v4o]

If I wanted to take out my funds in my Directors Loan account how would I log that in xero?

[@XUSolutions]

Make the payment and then when the amount appears on your bank reconciliation, code it to the Director's Loan Account. You should then double check that the Directors Loan Account balance is zero.

[@ibrarbutt1466]

Well planned and delivered, Wondering should we have two separate director loan accounts for two directors?

[@XUSolutions]

You definitely want to have separate loan accounts

[@dimitriosparasoglou]

@@XUSolutions how do you create additional director loan accounts?

[@XUSolutions]

@@dimitriosparasoglou go to the Chart of Accounts and add a new account