Dictionary of all accounting terms
A director's loan account is a record of all the money that the company's director (or other close family members) takes from the company which isn't salary, a dividend or expense repayment. This can also include money paid into the company.
This practice is normally associated with taxing practices within the United Kingdom.
The director's loan account may reflect money that is owed by the director (overdrawn) or money that is owed to the director (credit). Depending on whether it is a credit or overdrawn status, the director may have certain tax responsibilities.
Your company may also have to pay applicable taxes if you are a shareholder and director at the same time.
At the end of the financial year, you need to record any money owed by or to the company on the balance sheet.