Loans from Directors/Company Secretary

Hi All

 

We are a barber business just starting up.  Never used accounting software before, while there is loads of info that I am trying to wade through, I am feeling a bit overwhelmed.

 

To start the business up the three office holders of the company are putting in funds until the business starts to turn a profit.  I am just trying to work out the best way of doing this.

 

How to handle the funds that have come in from Directors

 

Do I create a Loan for each of the office holders in Liabilities?  I am reading that when I do this I select 'Credit Card as this makes the account available as a Pay from/to account when recording transactions'.  Then create a bank account for each of those loans (so essentially the liability amount = the bank account amount for each Director to start with). 

 

Or do I draw the funds direct from the liability - my very basic thinking is no that would not be the right thing to do, instead I should create a bank account where the funds go into to properly to journal the money out.  Then when the business is able to pay the loans off that is when the liability is reduced??  Question on this part at the end. 

 

Recording the transactions of the spend from the incoming loan

 

So working on the basis I would create a bank account, do I then for each invoice we have already paid action as follows:

1. go to Purchases, then
2. Record Supplier Payment (I presume I need to add each supplier as a contact first), then
3. allocate that payment from the Directors Loan bank account.

This would then show the amount coming from the bank acct (technically funds that came in from Director) and out (paying the bills that the Director funded).

 

Directors Loan will continue to increase for a while

 

We are still purchasing so will I be able to increase each of the directors loans in MYOB or do I need to add a new loan each time we buy new equipment?

 

Paying back the Directors Loan

 

When the business starts to turn a profit it will start paying these loans back.  What is the best way to handle that. 

 

Is it a matter of setting each of the Directors up as a personal contact then Purchase, Record Supplier Payment and pay the Directors from the business bank account.  Here is where I am super unsure - how do I then reduce the liability?

 

OR is there some other way I should be paying the Directors as a loan payment.

 

The idea is to pay the loans as and when we can so won't be regular payments and could take a few years.  

 

Hoping the above makes sense and someone can steer me in the right direction.  I am more than happy to do some more reading / watch videos so in addition to providing me with your much needed intel feel free to point me to those as well.  I may well have missed something. 

 

Thanks

Sharon