Cross Company charges help

amhorton555@yahoo.co.uk

Hi,

I have a limited company client in first year of trading, he runs a cafe it is leased off his other limited company at £500 per month including all bills, however as it was his first year of trading he did it rent free, would you still show the expense in the accounts as a private expense and journal through the directors loan account (obviously the mirror transaction and the other company) or leave it out the accounts all together? I'm unsure on this one as it is a business expense???

MarieNoelle

I believe you would need to decide whether it was rent free or a loan from the company to help with cash flow.

amhorton555@yahoo.co.uk

It was definitely rent free and he's not expecting it back into the other company, would you leave it out in that case then as other wise on the company that funded the free rent it would mean a debit on the directors loan account and the money is never going to be put back in?