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Paying a bill from a personal account.

  • 7 posts
  • # 115166

Hi, I am completely new here only just completing my Level 2 and hopefully moving on to level 3 soon.

My question is this, if a business (a partnership) hasn't got enough money in the bank to pay a bill, one of the partners pays the bill from their own personal account, does this now become a liability for the business and at some point when the business is back in the money it would be paid back to the partner? And what category would it be posted as (it wouldn't be a drawing would it?). Many thanks Paul

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  • 39 posts
  • # 115187

Paul,

Try treating it as capital introduced by the partner - see if that works.

  • 7 posts
  • # 115200

Thanks for the reply.

  • 7 posts
  • # 115221

capital introduced - is this actually a liability to the partnership? When the capital is paid back I take it this reduces the business profits? It would not be classed as a drawing for the partners?

 

Thanks

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  • 4 posts
  • # 115243

I have always put this through as an expense to company, create a supplier account in the name of the director (expenses) raise an expense form and put this on as an invoice. This will then be included in creditors short term liabilities.

 

When you have the funds to pay just pay the invoice amount back to the director as if you were paying a supplier. Smile

  • 7 posts
  • # 115249

Donna Lynch said:

I have always put this through as an expense to company, create a supplier account in the name of the director (expenses) raise an expense form and put this on as an invoice. This will then be included in creditors short term liabilities.

 

When you have the funds to pay just pay the invoice amount back to the director as if you were paying a supplier. Smile


 Donna, Thank you for replying to my query. My friend's accountant has been putting their payments down as a drawing, which I said to them I thought it was wrong.

Just one more question does your answer work with a Partnership?

 

thanks

Paul

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  • 779 posts
  • # 115250

Hi Paul,

Your friend's accountant is doing this the way I would as well for a Partnership.

If you think about it - Partner takes Drawings and when they use their own money to purchase items for partnership this then reduces the amount of Drawings they have taken.

Easiest way to do it IMHO.

Marilyn

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