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Erskine's avatar
Erskine
User
4 years ago
Solved

Loan made to my business from my savings account.

I bought plant and equipment for my business for say $25000 - 6 months ago, from my personal savings account. Now that the business is in a better financial position, I am looking to repay this outla...
  • The_Doc's avatar
    The_Doc
    4 years ago

    Hi Erskine 

     

    Although Tracey_H is correct - there is a simple view to be taken to help you move through this question.

     

    This question comes up all the time in startups and those not familiar with book kepping process of keeping it simple - i.e. you need to break this down into its components which will help you solve this.

     

    You have lumped it all together and yes you can put this altogether in 1 action (1 GJ) - it is not a good idea.

     

    Here is the problem broken into simple steps - and yes your accountant will need to know all this but accountants charge.

     

    1. 6 months ago you loaned your business $25000 - simple - create a liability account (make this a credit card - = liability bank account) (2-xxxx) called 'Loan to Related Parties and in Assets  - (1-xxxx) - create an account called CASH - Misc  - ( Journal =  GJ - Debit $25000 (tax code - N-T) 1-xxxxx/Credit 2-xxxx (tax code N-T)) 

     

    That is the loan taken care of - if you top this up - just do a GJ - the accountant will see this and know

     

    2. Bought equipment - is a separate process - ignore = your money - that has been taken care of - money is businesses - a loan - irrelevent now to the purchase.

     

    Let us assume it is a simple piece of equipment that will be depreciated over X years - and it cost you $24200 incl (22000 + 2200 GST)

     

    Setup a 1 - xxxx Plant & Equipment @ cost  - GST code = ASS = Assets 

     

    in general - ignoring what sort equipment it is and depreciation your entry would be as a GJ (Purchase - aquisition)

     

    Debit 1 - xxxx (incl) ticked 24200 (tax code ASS )  -  Credit -1-xxxx CASH - Misc  (tax = N-T)

     

    Your GST will will be available for claiming in GST on purchases in your BAS.

     

    Again this is simplified - and yes you should always check with your accountant if you are unfamiliar with MYOB and book keeping process - and yes this process can be shortened to a GJ.

     

    The Doc

     

     

     

The_Doc's avatar
The_Doc
Ultimate Partner

Hi Erskine 

 

Although Tracey_H is correct - there is a simple view to be taken to help you move through this question.

 

This question comes up all the time in startups and those not familiar with book kepping process of keeping it simple - i.e. you need to break this down into its components which will help you solve this.

 

You have lumped it all together and yes you can put this altogether in 1 action (1 GJ) - it is not a good idea.

 

Here is the problem broken into simple steps - and yes your accountant will need to know all this but accountants charge.

 

1. 6 months ago you loaned your business $25000 - simple - create a liability account (make this a credit card - = liability bank account) (2-xxxx) called 'Loan to Related Parties and in Assets  - (1-xxxx) - create an account called CASH - Misc  - ( Journal =  GJ - Debit $25000 (tax code - N-T) 1-xxxxx/Credit 2-xxxx (tax code N-T)) 

 

That is the loan taken care of - if you top this up - just do a GJ - the accountant will see this and know

 

2. Bought equipment - is a separate process - ignore = your money - that has been taken care of - money is businesses - a loan - irrelevent now to the purchase.

 

Let us assume it is a simple piece of equipment that will be depreciated over X years - and it cost you $24200 incl (22000 + 2200 GST)

 

Setup a 1 - xxxx Plant & Equipment @ cost  - GST code = ASS = Assets 

 

in general - ignoring what sort equipment it is and depreciation your entry would be as a GJ (Purchase - aquisition)

 

Debit 1 - xxxx (incl) ticked 24200 (tax code ASS )  -  Credit -1-xxxx CASH - Misc  (tax = N-T)

 

Your GST will will be available for claiming in GST on purchases in your BAS.

 

Again this is simplified - and yes you should always check with your accountant if you are unfamiliar with MYOB and book keeping process - and yes this process can be shortened to a GJ.

 

The Doc

 

 

 

Erskine's avatar
Erskine
User
4 years ago

Thanks  The Doc. What I'll do is to look at your solution and try and understand how it all fits together so that when I talk to my accountant later in the week I can feel like I understand the process.

Thanks again for your solution - much appreciated, Erskine