Hello again... I am finding this board tremendous for help and advice, for which I am very grateful. I have a couple of questions, which I am looking for help with..

1. I am making journal entries for pre-startup expenses. DR the expense account and CR the Directors Loan account. (MS Accounting automatically adds the VAT etc. to the correct account... which is nice!) Is it better to put all the DR expenses to different accounts (equipment, travel etc.) in the same journal entry with the DLA being CR for the toal amount.. or should I be doing the CR to the DLA for each individual DR to the different expense accounts? Does this make sense?

2. With the total in the DLA at say ?,500, if the company makes a sale which produces a profit of ?,500, can the DLA be DR and the bank account CR (i.e the money is being taken out straight away to repay the Director). Will there be Corporation tax due on the ?,500 profit? Will the Director be taxed on the payment of ?,500

Many thanks in advance for help with this..
Thank you
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Hi Trevor

1. Either is fine. One big journal is quicker. I'm not familiar with MS Accounting so if there is any extra info specific to that package, hopefully someone else can advise.

2. There are no tax liabilities for repaying a directors loan. You pay corporation tax on the profit, so yes, if you make 1500 profit after deducting your expenses then you will owe tax on this.
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Will there be Corporation tax due on the ?,500 profit? Will the Director be taxed on the payment of ?,500

Many thanks in advance for help with this..
Thank you

Yes CT will be due on the ?500 profit - current rate is 21%
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Technically speaking I would have thought there may not be any tax liability on the ?500. (Bear with me and correct me if I'm wrong).

The sale makes a profit of ?500, which is used to repay the DLA. However, the company has start up expenses of ?500. Assuming this is all 100% allowable, the company as a whole hasn't made any profit yet, it's just broken even.
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If you put all the expenses to different accounts, it will make it easier when doing your returns. You will need to do this if you have any capital expenses anyway.

You only need one CR to the DL account.

It will also allow you to have compartives for subsequent years so you know where you are spending money.
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Thank you very much..

Really helpful ...t hank you
Best wishes
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Technically speaking I would have thought there may not be any tax liability on the ?500. (Bear with me and correct me if I'm wrong).

The sale makes a profit of ?500, which is used to repay the DLA. However, the company has start up expenses of ?500. Assuming this is all 100% allowable, the company as a whole hasn't made any profit yet, it's just broken even.

This is quote possible (hence my comment profit after expenses). However, if some of the items were capital there is a chance they can't be deducted in full against profit.
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