Personal Loan to Business

[TarianPantry]

Hello

I have recently deposited money from my personal account to my business account to cover loan repayments and operating expenses. I am in the process of reconciling my accounts but am unsure of how to set up and then record these payments. 

I want to record how much of my personal money is being deposited into the business with the hope of oneday having the business pay me back personally. 

In MYOB how do I set up a personal loan account in order to reconcile my business bank account. I will be making monthly deposits.

Amanda

[RienaP · Accepted solution]

Hi Amanda @TarianPantry,

1) Create a new account in your Settings - business name (top left-hand corner) >> Accounts >>Accounts List). Set up a new account under Current Liabilities. Name this account "Personal Loan - (your name)"

2) From your Bank Feeds, you will allocate the mobey that you have deposited to your business account to your personal loan account that you created in step 1 with the date & amount loaned. 

I have provided you further notes on Loans and repayments which will guide you step by step setting up and making repayments.

Please let us know how you go as we are happy to assist further. - 

[ronatbas]

@TarianPantry@RienaP

Can I suggest a way that is very different to the MYOB reference that Riena has suggested as I believe the accounting in that will give an incorrect figure on your balance sheet. A loan to the entity should sit as a positive figure under liabilities. Receive money to an liability account will give a negative value to the loan.

If you set up a loan account as a Liability Account and as a Credit Card type you have the option of receiving or spending money. This means that when you when your contribute money to the business you can spend money/transfer from loan to the bank. You can also account for the small items that you buy from personal funds on behalf of the business, a ream of paper or sundry stationery, batteries etc.  On the other side if you take money as drawings it shows as spend money from bank to loan account. Any repayment of the loan money will also be the same spend money.

[TarianPantry]

Thank you for taking the time to reply to my question. I will look into both options and certainly  implement the way way for my business and my books.