Directors loans

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What nominal code do I use in Sage for Directors Loans

Directors loans are normally money that is lent to a member of staff who happens to be a Director. It is money that is owed to the company and has to be repaid. However, Directors loans can also be the other way round, where a Director who is also and owner lends money to the company.

The "direction" of the Loan is critical.

If you think this is "Pay" then it is probably a loan from the company, that will be repaid (probably by a dividend of equal or greater value at the end of the year)

If this loans is from the company then it is owed to the company just like your Sales Ledger (Debtors) so it will start with the number 1 in the standard Sage layout.

the 10XX codes are for stock and work in progress which will need to be sold before turning into cash.

the 12XX codes are for bank accounts which can be considered as cash.

the 13xx codes are for long term loans (lasting more than a year)

the 11XX codes are between the two, thing that can be turned into cash pretty quickly (short term) and without any extra work, things like the Sales ledger (Trade Debtors) are in this area.

This is a short term loan like a Staff loan so a nominal code adjacent to staff loans would be a good idea, I suggest 1110 for Staff loans (Subs) and 1120 for Directors Loans

If this loan is to the company then the company owes it to the lender, these start with the number 2 in the standard Sage layout.

the 21XX and 22XX ranges are used for short term credit which needs to be repaid within a year.

the 23XX is used for long term loans lasting more than a year.

The Directors loan could go in either group depending on the length of the loan 2250 or 2350 would probably do fine.

You can end up with several separate accounts for different directors and potentially having both loans to and from the company of different sorts.