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Directors’ Loan Accounts

M. Casey - Bristol

"My dividends had always covered the drawings I made but after sharp decline in sales I was left seriously overdrawn."

Overdrawn DLA

Did your last set of accounts show an overdrawn directors’ loan account?

An overdrawn directors’ loan account is where a director has taken funds from a company but these have not been declared as salary or dividends and taxed as such.

It is common for Directors of small to medium sized companies to withdraw funds and take an accountants advice on the most tax efficient method of withdrawal. However if trading slows this can mean dividends are not legal (you could then be asked to pay them back at a later date) and you may be unaware that your accountant is creating a directors loan account.

It is important to take advice regarding your position as director if you do owe money back to your company.

If you are worried about your directors’ loan account then why not call us for some free advice today.

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Case Study 1 – Security Services Company


Contracts had not been costed properly and the accounting system was non existent. The company was leaking money and when we scratched the surface it was clear that large debts had built up.


Case Study 2 – Builder


The downturn in the housing market saw a major change in fortunes for this company. Contracts disappeared and existing projects were scaled back. Having taken on employees and bought additional equipment during the housing boom this left the business in an impossible situation.


Case Study 3 – Florist


Like most businesses this limited company saw a fall in sales as the recession took hold. Flowers were seen as a luxury item and with money tight customers dried up. The bigger wedding and corporate buyers also began to spend less.