Spending before you earn
How to fund it and what it means for your tax allowances
It is normal for a new company to spend money before it earns any. The costs are not wasted, and the funding is straightforward to record.
How to fund it
Most directors lend money to the company, which sits as a credit on the director's loan account and can be repaid to you tax free once the company has income. The alternative is to put money in as share capital, which is more permanent. Either way, record every amount that goes in.
The tax position
Business costs incurred before income arrives are still allowable. If the first period ends in a loss, the loss carries forward automatically and reduces Corporation Tax in the first profitable year.
💡 Good to know: Lending in through your director’s loan account is the simplest route for most new directors. We record it at onboarding, so repaying yourself later is clean and tax free.
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