Articles Blog
Xero/Reckon/MYOB - Bookkeeping entries for loans – Lending money to business
- Details
-
Published on Thursday, 11 October 2018 16:08
A regular client emailed to check they had entered a transaction correctly - lending money to pay business expenses - in this case, to cover a PAYG payment to the Australian Tax Office (ATO) – they emailed –
"I am a little unsure about an entry I have made and wonder if you can tell me if I have done correctly.
I had a PAYG for Chris and at the time there wasn’t quite enough funds in Bus. a/c so I transferred money from personal a/c to cover.
For MYOB entry I put to.. Receive Money
Payer: C and personal
Amount: $ -----
Method: Other – then put note in details.
Memo: funds transfer from Pers. to Bus a/c
Then I credited
21410 - PAYG Tax which is where the payment will come from
is this correct or should I have put to something else?
Kind regards, L"
Answer –
Good effort – nearly right!
There are 2 transactions to do, just to be clear (and a third one to pay it back later) -
1 You lend money to Business Bank account –
a. Receive Money
i. Top account is Bus bank account, then date, $ etc
ii. Memo – eg “C&L loan to Bus bank”
iii. Lower account is YOUR Personal Loan account – either a number 2 Liability (Long Term), or Equity – but number 2 and set as a CREDIT CARD allows you to use in other Transactions like a bank account at the top account
2 The Business PAYS the PAYG –
a. Spend Money
i. Top account is Bus bank account, then date, $ etc
ii. Memo – eg “Pay ATO PAYG” – add name if specifically matches an employee amount
iii. Lower account is the 2-1410 PAYG Tax account
3 The Business pays you back – if this occurs later (or can just leave as is and business always owes you this later)
a. Spend Money
i. Top account is Bus bank account, then date, $ etc
ii. Memo – eg “Pay ATO PAYG” – add name if specifically matches an employee amount
iii. Lower account is the 2 Liability Personal Loan Account
Hope that is clear!
Need help? Not sure? Call for FREE30min advice / strategy session today!
Call 0407 361 596 Aust
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
