Recording Personal Drawings and Director's Loans

You've taken a sum of money out of your bank account and used it for personal reasons.  Technically this is not a business expense so you can't claim for it but we still need to match it with the bank statement.  The transactions are entered using the Journal.  When adding entries to the journal, we credit the giver and debit the receiver.  This guide goes through the most common scenarios.

Personal Expenses or Drawings

For personal expenses that are paid from the business bank account, or if you are moving money to your own personal bank account, you need to record the transaction as a journal entry.

First create an account such as Withdrawing Account or Owner / Director Current Account (both accounts are like Director's Personal Expenses) under Settings > Chart of Accounts > Add Account.

Set the Account Type to be Liability.

Now go to Account Manager > Journals > Add Journal and fill it in thus:

Enter the Date and leave the Property field blank.  Set the reference to match the corresponding entry on the bank statement.

Debit the Owners Account and credit the bank account that the money is coming out of.

Save the transaction.

The system will see these as transfers of cash and not expenses and will handle them differently.

Director's Loans

Sometimes the owner of a business may deposit some of his or her own money into it, for example as cashflow when the business starts, and then withdraws this amount at some point in the future, or the business may loan funds to the owner which the owner then pays back to the company.  These transactions are recorded against a Director's Loan Account.

A Director's Loan Account is created as a liability account in Settings > Chart of Accounts.

Under Account Manager > Journals > Add Journal, again, you don't need to select a property but do fill in the rest of the details. The example below is showing money moving from the business to the director:

If the director pays into the business as a loan, then please reverse the above transactions.