Writing Off Loans:. If a loan cannot be repaid and is written off, it is treated as untaxed income for the director.The amount of loan written off will have to be included in the director's self-assessment tax return on a specific box on the 'additional information' pages. A writeoff is merely an accounting adjustment and does not formally release the director from the obligation to pay. As the director of a limited company you can borrow money from the business (or lend money to it) and account for it as a director's loan. The company resolves to write off the balance of £20,000 on her overdrawn loan account and meet any additional costs for her. A business entity can be formed in California online at bizfileOnline.sos.ca.gov. Filing tips are included with most online forms.