Debt to Oneself?

[Bell John]

I work as a software contractor at an hourly rate, but
as I work through an agency, I have never needed to
concern myself with accounting issues.  I now want to
undertake a software project as a separate business
exercise whilst continuing my standard contracting
work.  Initially I do not want to form a company to do
this project, but as I will be investing money in the
project and time that otherwise may have been spent
contracting, I want to account for these factors in
terms of the "company" owing me for the capital loaned
and the labour expended on the exercise.  As there are
not two legal entities I was going to include both my
personal and business accounts in the same chart of
accounts, with an Accounts Payable account for the
business side and an Accounts Receivable account for
the personal side to deal with these transactions.  I
just want to check on the correct procedure for
implementing such an arrangement.  My thinking is to
express the debts as transfers from the business A/P
to the personal A/R.  In such a circumstance should I
pay off the debt by a transfer from business A/P to an
expense account and a corresponding transfer from
personal A/R to an income account?  Whilst this seems
correct from my understanding of the underlying
principles (but I am a beginner in accounting!) there
is the problem that whilst the act of incurring the
debt is guaranteed to zero balance, the act of paying
it off is not.  Am I barking up the wrong tree?



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