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Initial shareholding capital - how to account for?

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    Initial shareholding capital - how to account for?

    Right, I created company with X shares worth £1 each, so total shareholders capital is £X. Now, company may need to spend money on things, so, how do I actually account for that £X -- should I just transfer the amount from my personal account into business account, and record that transaction as moneies received from shareholders?!?! :rolleyes

    #2
    As it's the only income your company is likely to get in the forseeable future why not

    You don't have to though.

    Comment


      #3
      You don't have to though.
      So whats the point of shareholder capital of X? Is that purely for stating the limit of your liability as the company?

      The reason I ask is because I dont want to pay myself salary until next April so that my total earnings for the year will be reset -- would need to make some purchases through the company before that though.

      Suppose I could loan company money (not company to Director), how would that need to be accounted for?

      Comment


        #4
        Debit bank

        Credit share capital

        or

        Debit DLA

        Credit share capital

        Double entry is a wonderful thing:lol

        Was the company set-up with one or two share(s) issued? If yes, I would not lose sleep over this. You may have share capital of 1,000,000, but as you only issued one or two shares then it is only going to cost you £1 or £2.

        Just thoughts, speak to your accountant for professional advice.

        Comment


          #5
          He hasn't got one. He thinks they are not worth the money. He'll learn

          Comment


            #6
            Re:Shares

            Debit DLA

            Credit share capital
            If you do that then you can't say the shares are fully paid up

            Comment


              #7
              Re: Re:Shares

              It's pointless offering the Russian any advice - he always knows best.

              My advice was to hold fire on setting up the company and get an accountant (who would set it up for free) when there is a product. I also advised he keep the day job too and use the time he wastes on here for something constructive.

              What is going to happen is he'll build up a mish-mash of bits of paper and spreadsheets (probably in some friggin linux specific format that no commercial outfit will be able to read). He'll be pestered by the IR to set up a payroll. Come year end he'll have a pile of crap that will probably cost more to convert into accounts than if he'd had an accountant from the start. Naturally even more time will be wasted asking dickwad questions on here and scouring the web for stuff which he really shouldn't need to be bothering with or which would be answered immediately by a quick call to the accountant.

              A pig headed idiot if ever there was one.

              Comment


                #8
                Re: Re:Shares

                Co has to have some share capital, usually some nominal figure like £100 and It has to issue some, again nominal, usually £1 each to directors or anyone else you will want to pay divis to.

                It isn't real money, just meaningless legal bollux. Apart from showing it in accounts and filling in some poxy forms to cos house and IR no real relevance to anything.

                I suppose you could fund the company by paying wads for your share but it more usual to just lend it money. That way if you are not earning anything you can charge interest on it. Just keep records of your loan so IR don't think its income. Best to draw up short agreement on any repayment interest.

                Comment


                  #9
                  Re: Re:Shares

                  AtW

                  Are you proposing to run a limited company without an accountant ?

                  Comment


                    #10
                    Re: Re:Shares

                    As Xog says, just loan some monies to the company and show it as owing to you.

                    Need a printer to print out invoices. Make a personal check out to company and deposit in company account. Add said amount to 'AtW' ledger/account/tally thereby flagging it as owed to you.

                    Another example. If you pay mileage expenses you don't have to write a check out to yourself each time. You can add the amount to your 'AtW' ledger and pay yourself a lump some when cash flow permits.

                    Has nothing to do with dividends. Just like a loan from the bank.

                    Comment

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