Hi Phil,

Thank you for using Sage City please accept my apologies for the delay in response.

Based on what you have described I would suggest recording the purchase of the expenses as a directors loan. More information on recording a directors loan can be found here: https://help.accounting.sage.com/en-gb/accounting/chart-of-accounts/directors-loans.html?Highlight=director%27s%20loan

Based on the query It sounds like you have invested capital to get started, specifically using the capital to purchase equipment which, where applicable, allows you to reclaim VAT.

The only thing to be wary of is if you are on the flat rate scheme where certain criteria applies on expenses. More detail here: help.accounting.sage.com/.../accounting-vat-schemes.html

Regards,

Malcolm Purvis

Sage UKI

Hi Malcolm,

Thank you for the response, I thought that might be the case, but should I mark the invoice to be paid from "cash" for instance as otherwise the bank account reconciliation wont match our actual banking statement?

You are correct, i have invested in purchasing equipment, using my own personal account, and now ready for putting it in to the system for logging. But wont receive the money back until ready. We are on a Standard rate of VAT so should be ok there.

Thanks again.

Regards,

Phill

Hi Phil,

Thanks for coming back to me.

When creating the director's loan account you would set it up as a bank account and then pay your invoices\expenses directly from that account. Doing it this way will not impact the reconciliation of your business bank account.

The directors bank account will then show as a liability or money owed to the business. At the point where the business pays you the capital back you would record it as a bank transfer from the business bank account to the directors loan account.

Regards,

Malcolm Purvis

Sage UKI