Small business query

seanmc1980

I recently start a small business. Financial year ended 2011. i lodged 100 cash to cover fee etc. how do i treat this 100 in my year end account. its a ltd company and i bought it for 2 euro it was a collegues dormant company.

paul71

seanmc1980 wrote: »

I recently start a small business. Financial year ended 2011. i lodged 100 cash to cover fee etc. how do i treat this 100 in my year end account. its a ltd company and i bought it for 2 euro it was a collegues dormant company.

The €100 should be treated as a directors loan. It is purely a balance sheet transaction with no impact on the P&L, you credit the directors loan account and debit the Cash/petty account if it was a cash transaction or the bank account if it was lodged to the company bank account.

seanmc1980

would it be messy to include it as Capital in the capital and reserves account? Share permium or something.
If i include it as a loan do i have to make a note about it

paul71

It would be messy to include in the capital because it is not legally capital unless shares are issued against it, which would involve another submission to the companies office for the issuance of further authorised share capital. There is a requirement to disclose movements on the directors loan accounts in the notes to the accounts, but appending that note is much simpler than issuing new shares.

seanmc1980

yep sounds good paul, thanks!