“I am a business consultant and I have recently opened a limited company which I am due to start trading through shortly. I have opened a business bank account but would like to put in some start up cash (about £5k) into the account to fund the first couple of months cashflow as although I have some contracted work, the invoices will not be paid for 30 days from submission. Are there any issues in me doing this and are there any tax implications?”



There is no problem with you doing this. Money you introduce into the company will be accounted for as a “Directors Loan” (which will sit on the Balance Sheet i.e. it won’t be a Profit and Loss item) which can be repaid as and when with no tax implications. The only time there are potential corporation tax issues around a Directors Loan balance is if it is in debit i.e. where you owe money back to the company – see our recent post here.

Items which could put your Directors Loan further into credit are:

  • Business expenses you have paid for personally
  • Use of Home as Office claim
  • Salaries if you are not taking them out as cash
  • Dividends if you are not taking them out as cash

Items which would be Debits to your Directors Loan account include:

  • Repayment of Directors Loan balances
  • Personal expenses paid for by the business bank account
  • Further money borrowed from the company

Remember you will also need to put money into the company to pay for your subscribed “Share Capital” – this is probably something like £1 or £10 or £100 depending on how you set your company up – you’ll need to refer to the initial Companies House documents to confirm this.