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Is it better to get a loan amount in current a/c or personal account from a friend in case of proprietorship?

22 May 2017

I am taking a loan from a friend of Rs.10 lakh for my business at a particular ROI. I want to ask whether he should transfer the amount into my current account of personal account. I am a proprietor of the firm for which I am taking loan. Regards

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4 Replies

CA Janani (ACA ACS DISA(ICAI)) (359 Points)
Replied 22 May 2017

tHERE IS NO BIG PROBLEM IN THE TYPE OF ACCOUNT

IF YOU ARE TAKING IT INTO CURRENT ACCOUNT OF THE FIRM, THEN DIRECTLY YOU CAN ENTER AS

CURRENT A/C DR

TO LOAN A/C

IN CASE, YOU ARE ROUTING THRU SAVING ACCOUNT(WHICH YOU ARE NOT BRINGING IN BOOKS) THEN

BUSINESS BOOKS:-

CURRENT A/C DR

TO CAPITAL A/C

PERSONAL BOOKS:-

SAVINGS A/C DR

TO LOAN A/C

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CA Neha Agrawal (CA) (830 Points)
Replied 22 May 2017

For proprietor type of account doesn't matter, you can credit the loan loan in either current account or saving account.

1 Like

Ankit Manocha (MBA) (40 Points)
Replied 22 May 2017

Thanks a lot CA Janani & CA Neha Agrawal.

PARUL YADAV (finance expet) (93 Points)
Replied 20 June 2024

When deciding between receiving a loan amount in a current account or a personal account for a proprietorship, it's generally better to use the current account. This ensures a clear separation between personal and business finances, which is crucial for accounting and tax purposes. Moreover, banks like Kotak Mahindra Bank offer tailored solutions for business accounts that can provide better interest rates, transaction benefits, and financial management tools. Keeping business transactions within a current account enhances financial transparency and can make it easier to track and manage business expenses and income effectively.