UK directors loan account


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Am I right in thinking...

In essence, being a limited company, a separate legal entity, assuming it is owner managed, the owners (directors) are not able to just withdraw cash as they please from the company so in effect a directors loan account will replace the standard drawings account you would typically see for a sole trader?
 
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Am I right in thinking...

In essence, being a limited company, a separate legal entity, assuming it is owner managed, the owners (directors) are not able to just withdraw cash as they please from the company so in effect a directors loan account will replace the standard drawings account you would typically see for a sole trader?
Yes exactly, but there is a difference: the wdrawal account of a sole trader is a contra equity account while the loan account of directors aren't
 
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Joined
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Yes exactly, but there is a difference: the wdrawal account of a sole trader is a contra equity account while the loan account of directors aren't
Thanks for clarifying.

The directors loan account, in theory, should be a liability account in the first instance, correct? Depending whether debit or credit balance, which links to of course the rules in respect of debit balances on the directors loan account 9 months after the company's year end, tax implications, interest and so forth.
 

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