What are petty cash and director loans❓
What are petty cash and director loans❓
Petty cash and bank loans are and similar purposes of use because petty cash And the loan for directors is a draw that people within the business have to spend. But these two types of cash bookkeeping are different in many ways. We'll take every novice entrepreneur to understand petty cash. and loans from directors
🔸 What is Petty Cash?
Petty cash is cash that is used for internal expenses. that the business has set for employees to be able to request for reimbursement to be used to spend on various parts of the work; Petty cash is a small amount of money that is needed during the day. such as travel expenses to meet customers The cost of office equipment, document delivery, printing documents, photocopying, or it can be a special meal for encouraging employees as well.
However, the highlight of petty cash is money that can be spent. without having to wait for the boss or executives sign approval before making payments Employees can use petty cash immediately. and then make a request for withdrawing money
🔸 How to deal with petty cash that will be used within the business
Dealing with the petty cash that you will need to run the business. First you calculate the petty cash budget that you will need each day. and assessed to suit the size of the business if it is a general small business May set the amount of cash at 5000 – 10,000 baht per week. or in one month as appropriate
When the estimated amount of petty cash is obtained Subsequently, the responsibility for holding petty cash is determined. In this section, accountants or the business owner can hold petty cash for orderliness and ease of disbursement and prepare various documents You should set a date when the drawdown can be made, for example, every Tuesday. Withdraw every 15th of the month or withdraw every 30th of the month. Employees must bring documentary evidence such as receipts and petty cash slips to the petty cash holder. to withdraw money And the accounting staff must keep the documents as accounting evidence.
How does petty cash affect the business?
– Petty cash will help reduce minor burdens on the business. Reduce delays in withdrawing for miscellaneous expenses.
– Prevent the use of cash for personal use Because petty cash can be withdrawn when there is evidence showing that it is an internal benefit spending.
– Makes bookkeeping easy and more organized because there is a clear separation of duties of money in each part
– Reduce the risk of losing money or error in storage because there is only one cash holder And the amount is not much.
🔸 What is a director loan?
director loan It can occur in two main ways: it is the money of the business that the business owner borrows. or the money of the business owner to borrow but mostly found The owner of the business has withdrawn, borrowed or used money. without knowing what to do because they didn't bring back the documentary evidence of the use of money Unlike petty cash, it has a clear purpose for what it does. and have evidence of the request for withdrawal for actual use
🔸 Why is there a director loan account?
There are cases such as
- When registering as a juristic person Not registered with real funds, such as having only 250,000 baht in capital, but requesting to register with 1,000,000 baht in capital as popularly registered causing the business owner to have a debt of 750,000 baht in the business's account (Minimum registered value per share equals 5 baht)
- Business owners want to use money for personal use. Therefore, the money of the business came out without documents and evidence that it was used for anything.
- The business lacks working capital therefore borrowing money from the business owner to use
- Have a lot of income but avoid accounting for the income of the business in order to pay less tax
- It is an accounting adjustment to balance
🔸How to prevent the occurrence of director loan account?
– Register a company with actual capital
- Separate expenses within the business and personal expenses apart
– Paying expenses within the business with internal money Personal money should not be used within the business.
- Do not use money within the business for personal use Even though the business has made a lot of profits To implement it should be corrected by payment of salaries, dividends or compensation.
– In the event that the business owner lends to the business, they must produce verifiable evidence such as a contract stating the loan amount. and interest on the loan in full
🔸 How to use business money properly
- Company registration with actual funds available Not popular capital 1,000,000 baht
- Must clearly separate personal money and business money Money for a business to open a bank account in the name of the business. not on behalf of the business owner
- When there are expenses of the business It should be paid from the bank account of the business. or petty cash Instead of paying from the owner's personal money
- It is not recommended that the business owner withdraw money at his own pace without a reason If the business has a lot of income and wants to use the money The correct process is make it your own income by payment of salary, dividends or compensation with certified documents
- If the business owner or partner has borrowed personal money to use as working capital in the business Should provide evidence that can be verified, such as a contract indicating the amount of the loan Specify the complete list of interest on the loan that must be paid.
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