I have a question about recording expenses, as I’m confused between my role as a director and owner! (Limited company). So when recording a business expense, do I use the director’s current account (under liability) or the director’s account (a capital account under equity)? I guess the first accounts as an expense paid from the director’s personal funds, not the company’s. And the later accounts as a contribution to the company’s capital.
In your opinion, what is the right way to record expenses? I think there are 3 options:
- use expense claim, with the payer as the director’s current account (liability).
- use expense claim, with the payer as the director’s account (capital account, equity).
- use the “director’s bank account” as money spent for those expenses.
I think the right way is option 1, but then, the company will be liable to the director and that would need a bank transaction to pay it off. I’m more inclined to go for option 3 and not use the expense claim at all. This bank account is included in the “Cash at Bank” which can be balanced out by a simple transfer: company’s bank account > director’s bank account.