Is money spent on a business always a "director's loan"?

[JohnOhn]

I have a question:

Is money spent on running a business always a "director loan"? Can it ever just be an "investment"?

Let's say an individual (John) owns a legally registered company (John Limited). John transfers money from his own bank account to his company bank account and then John spends this money from his company bank account on business costs.

Is that a "directors loan"? Does it need to be? Can't it just be considered an "investment"?

I ask because I'm trying to figure out if a directors loan agreement is required if I, as an individual, transfers money into the bank account of the company I founded and solely own. If a director's loan agreement is required it would literally be me signing a loan agreement twice.

Thanks!

[Fazer_1985]

@ John,

Money transfer through your personal account to business account can be taken in two ways.

1) director's loan
2) Share capital

for director's loan, i think you have to have a accountant and its not possible without involving accountancy firm.
and if you dont keep it as director's loan, it will be share capital.

[Expatinlaw]

[quote="Fazer_1985"]@ John,
i think you have to have a accountant and its not possible without involving accountancy firm [quote]

Could you please expalin why it is so? Why John cannot just ransfer his money from personal to business bank acc under the Director`s loan Agreement?

[Expatinlaw]

@ John,
i think you have to have a accountant and its not possible without involving accountancy firm

Could you please expalin why it is so? Why John cannot just ransfer his money from personal to business bank acc under the Director`s loan Agreement?

[Fazer_1985]

@expatinlaw


I did not say that he cant transfer his money, its his money and he can transfer when ever he wants. I meant when you transfer money in your business account you need to show it as something e.g share capital or directors loan at the end of company financial year or when you do you accounts.

One has to mention the money transfer is share capital or directors loan. Correct me if I am wrong.

[smart_gem]

A director loan usually stands as a short term transaction
If the balance sheet shows it as a long term investment then it is ok. The most appropriate approach is to increase / decrease issued share capital whenever money flows in or out from director's personal account to business account