If my director uses company funds to pay up his insurance, what's the double entry & can I treat it as loan paid back to director since that he has injected loan to company earlier on? The amount is around USD20k & cheuque issued to insurance company. Thanks
Director expense
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Possibly, yet possibly not. The loan given by the director will have its own conditions attached to it. So you'd need to look at that before deciding what to do. It might be that the use of the company's money to fund the insurance bill is actually a separate liability of the Director's.
With loans, there's generally the amount borrowed and the agreement to pay back at x amount, over y months/years, which is all wrapped up in cash flow forecasting/financial modelling. An early repayment of $20k on account of a director using company funds to bank roll their own insurance, may or may not figure in any of that.
The devil is in the detail when it comes to this sort of thing and it lies within the loan agreement between the company & director.
With loans, there's generally the amount borrowed and the agreement to pay back at x amount, over y months/years, which is all wrapped up in cash flow forecasting/financial modelling. An early repayment of $20k on account of a director using company funds to bank roll their own insurance, may or may not figure in any of that.
The devil is in the detail when it comes to this sort of thing and it lies within the loan agreement between the company & director.