Pay back from business

#1
Hi Geeks!
I used my personal credit card to purchase everything I needed to start up my business meaning my business owed the credit card.
Until now, however, I’ve been paying the credit card using my own money on behalf of the business.

The business is now in a position to take over the payments to the credit card. I however, would also like to be able to get my money back from the business. So it’s not income and it’s not taxable, it’s just money I already had. It won’t be an allowable expense as the money has already been recorded as an allowable expense as part of the original start up costs.
How should I record these payments?
 

salonfrog

Active Member
#2
Hi
For each of the allowable expenses incurred, your business should have recorded 2 sides to the transaction. The first is the cost (which you have done). The second is effectively a loan you have made to your business (by paying for its costs on its behalf).
As of today, the total loan you have made to it will be the total of all the expenses you paid on your card.
You can record these new payments out of your business as repayments of the loan to you.
 

#3
Hi
For each of the allowable expenses incurred, your business should have recorded 2 sides to the transaction. The first is the cost (which you have done). The second is effectively a loan you have made to your business (by paying for its costs on its behalf).
As of today, the total loan you have made to it will be the total of all the expenses you paid on your card.
You can record these new payments out of your business as repayments of the loan to you.
Thank you for that. Much appreciated. Can I ask if I need to put these ‘loan repayments’ on my tax return? And if so, is there a specific place I record it? Or is HMRC only interested in the total costs and income? I’m using cash basis and trying to keep things simple. I haven’t put any house utility usage (electrical or heating) as yet.
 

salonfrog

Active Member
#4
No need. It’s only after your income and expenditure. As you’re on cash basis, you include the expense when the supplier is paid.
And as you mention, claim all the non cash costs as well like home usage and mileage.
 

#5
Thank you so much for all your help. No matter how many ways I google search for information sometimes it’s easier to ask someone and get a straight answer. Grateful for all your help. Thank you.
 

#6
No need. It’s only after your income and expenditure. As you’re on cash basis, you include the expense when the supplier is paid.
And as you mention, claim all the non cash costs as well like home usage and mileage.
Hi once again.
I’ve been getting my paperwork in better order. Does HMRC ask for this to be sent/produced along with statements every year?
 

salonfrog

Active Member
#7
HMRC only ask that you complete a tax return and submit it.
It is only if they decide to investigate your tax return that they may then ask to see the invoices to back up the costs you’ve entered in the return. They will also want to see your business bank statement.
So it’s great you have all your paperwork in order in case they do ask.
 

#8
Thank you.
 

#9
Oooo. One more question! Should I be paying my NIC from my business account? I’m assuming it’s not an allowable expense?
 

salonfrog

Active Member
#10
Correct, Not allowable and pay it from your personal bank account (unless you’re paying yourself through a Ltd company in which case it would be allowable).
 

#11
Thank you.
 
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