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Employee and/or Director Reimbursements via Spend Money

Jen65

Hi, Ive noticed that reimbursing an employee for expenses is now done through payroll but for years i have done it through spend money using their payroll card, is there a problem with this ???

Also now i need to reimburse my Director who has made a payment on his personal credit card he does not have an employee card so do I set up a card just in his name and then reimburse him through spend money, I assume this would be the correct way to do it.

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Tracey_H

Hi @Jen65

A Director loan account is generally set up to track amounts paid by and owing to the Director. So if the Director pays for a business expense on his personal credit card you would:

record the business expense as either a Pay Bill or Spend Money transaction and change the Pay from account to the Director loan account. Whether you record the purchase as a Spend Money or Enter Purchase and Pay Bill, the expense is allocated to the applicable expense or Cost of Sale account
when you reimburse the Director record a Transfer money transaction, this shows the amount as a withdrawal in the bank account and clears the Director loan account
go to Find Transactions and search by the Director Loan account, there should be a credit for the purchase transaction and a debit for the reimbursement

Please let me know if you need further help with this.

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Jen65

This is a business expense though just the Director paid by his personal bank card in error not the business credit card, so i need to reimburse him but I need to record the expense and reimburse him?

Tracey_H

Hi @Jen65

Thanks for your post. Generally speaking you could use either method, however, processing the reimbursement through payroll allows you to track and report the reimbursements. If you're not sure what's best for your business I do recommend speaking to your accountant about how they should be recorded.

Directors would typically have Director loan accounts which are used to track purchases and reimbursements. A Director loan account would be set up as either a Liability or Asset account with the Account Type set as Credit Card or Bank. When recording purchases paid for by the Director you would change the Pay From Account to the Director Loan account. When you reimburse the Director you would record a Transfer Money transaction, transferring the amount from the bank account to the director loan account.

I'd also recommend checking with your accountant about how best to record the payments made by the Director to suit your business. If setting up a Director Loan account you'll also need to ask your accountant if it needs to be an Asset or Liability account.

Please let me know if you need further help.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.