What Is a Shareholder Loan?
How the shareholder loan account works, and how to stay out of trouble with it.
The shareholder loan is an account in your bookkeeping system used to track the money you (the shareholder) have loaned to your company, less any money paid back or borrowed from the company over time.
You can think of the shareholder loan as a bank account with overdraft protection.
As the shareholder of your company, you can deposit or lend money to your company. It’s placed in your shareholder loan account. You can withdraw money from your shareholder loan account, just like a bank account. When you take too much out of your shareholder loan account, it goes into ‘overdraft’. Now you owe your company money.
Be aware, this ‘overdraft’ needs to be repaid within one year or there could be some tax consequences to deal with.
For a more detailed explanation see our blog post: Shareholder Loan: Uses & Pitfalls
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