You lent money to the company but also took personal withdrawals
Reconcile contributions and withdrawals before claiming offset or net director account position.
Corporate Recovery Partners
01 / 06
The director remembers funding more than withdrawing
A hypothetical director says the company cannot claim money from them because they paid its bills during a difficult year. The accountant's records also show personal withdrawals and several unexplained transfers. Reconcile both directions before drawing a conclusion. A recollection of supporting the company does not establish the treatment of every payment or a legal right to offset amounts.
Collect bank records, invoices, reimbursement documents and any loan agreements or approvals. Identify whose account paid each amount and the stated purpose at the time. Keep uncertain items marked for review. Do not reclassify withdrawals as wages, dividends or repayments simply because one description produces a preferred balance.
AFSA explains that a company's liquidation does not remove a person's responsibility for debts they may owe the company, such as a loan. Whether this director owes money, is owed money or has other claims needs assessment of the actual records. Ask the accountant and lawyer to review the position rather than assuming all movements can be netted automatically.
In the hypothetical example, list supported company expenses paid personally separately from cash withdrawals and other contributions. Ask the accountant to explain the proposed classification and any opening balance. Preserve the original records and the reason for corrections. A neat final total is useful only if another reviewer can trace how it was reached.
Provide unfavourable as well as favourable entries and explain any missing support. If a liquidator requests information, obtain advice on the response while meeting relevant obligations. Do not transfer assets or create retrospective documents to make the account disappear. Questions about recovery, repayment or set-off require proper assessment of the legal circumstances.
Retain the reconciled schedule and the advice explaining what it does and does not establish. CRP can help organise the commercial records. The objective is an accurate account of money moving between the director and company, not an assumption that past generosity automatically answers every later withdrawal.
