Lending money to your company: keep a clear funding record

This guide helps an owner who has already transferred money, or is about to fund a company bill. Keep enough detail for another person to follow the transfer and understand the arrangement.

Write down the arrangement before coding the deposit

Start with the legal names of the payer and company, the amount, transfer date and intended purpose. Attach the relevant agreement or decision record. ASIC's company record-keeping guidance includes financial records and loan documents among the records a company needs to keep.

A loan records an obligation to repay under its terms. A capital contribution needs the appropriate company and accounting treatment. Choosing between them can affect rights and tax, so get that decision confirmed for the actual arrangement. A bookkeeping label cannot create the missing agreement.

When the arrangement hasn't been settled, give the bookkeeper the facts and an explicit open question. Ask how the unresolved item should be handled while advice is obtained. Avoid treating every transfer from a director as sales revenue or putting it into an existing loan balance simply because that account is handy.

Keep reimbursements in their own evidence trail

If you paid a supplier personally, save the supplier invoice as well as your bank transaction. Record which business expense it relates to, who approved the reimbursement and whether the company has already paid you back. Otherwise the expense can be entered twice or disappear into a funding total.

In the example, the $600 needs its own decision and supporting invoice. It has not been added to the $10,000 remaining loan. Your accountant may decide how the item belongs in the accounts; the record should preserve that decision and its source.

The guide to paying yourself covers money coming out of a business. Keep that decision separate from identifying the transfer that originally funded the company.

Match the loan record to both sides of each payment

For an agreed loan, record each advance and repayment with bank references. Confirm the opening balance before adding the new transfer. In the worked record, $12,000 less the documented $2,000 repayment leaves $10,000.

Reconcile this schedule to the company ledger at the same date. If the ledger says $10,600, look for the reimbursement item or another posting rather than changing the schedule to make it agree. The balance-sheet guide helps locate the corresponding balance.

Don't assume the company can repay whenever cash appears. Check the agreement and obtain advice about any company, solvency or tax question before making a payment. This worksheet records what happened; it does not authorise a repayment.

Store the explanation with the numbers

Keep the agreement, transfer evidence, ledger references and written classification together. If you change accountants, hand over the opening balance and unresolved questions, not just the latest bank statement. That lets the incoming adviser see how the amount was built.

Key takeaways

• Record who paid the money and why, not just its bank description.
• Keep loans, capital and expense reimbursements separate.
• Match repayments to the documented funding balance.

Where to get help

Use ASIC company records guidance for the record requirements. Ask your accountant to confirm the classification and a solicitor to address loan terms or company-law questions.