Canada Basic Bookeeping questions from a beginner - Incorporated

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Hi, I have bookeeping knowledge, 2 classes business school, but that was 20 years ago.
My question is about money being spent from my corp's chequing account, but having no expense. In this case it was money sent to a worker employed for 2days. They provided no invoice, and received an etransfer. When this occurs, is it actually just a reduction on the shareholder loan?

I'm interested in this type of transaction because the Company has 2 50/50 owners (shares) but I've invested all the start up money into the Company, my partner has invested nothing, but he brings in all the expertise and gets sales for the company. The company is 1 month old.

I believe if we keep spending money on short term workers, the bank account will be depleted to zero, my shareholder loan will still exist, but I 'll have to invest more and more to refill the chequeing account as we wait for some of the contracts to pay out.

I understand that a shareholder loan isn't supposed to turn to a debit balance, since it's not a loan at that point.
Is this my journal Entry?
Cash 500
Cash Paid Worker 500

In other words, 'Cash Paid Worker' is an Expense, Just not a Eligible Expense for Tax purposes? How does the Tax authority, differentiate between an unnamed Cash Paid worker and a repayment of the shareholder loan account? It's cash out to somebody, I would expect the tax authority would say I'm taking cash back out of the company's chequing account to my personal account. Not sure. Problem is the money isn't going back against my start up investment, it's going to worker who I don't even know the last name of. I made sure that the money was sent out by etransfer, rather than withdrawing it in cash and paying the worker. It seems that lots of start up companies in my shoes, would just write a invoice of sorts (on behalf of the worker), and invoice themselves, and make that into an expense that can offset income. Of course that's illegal (writing invoices for an individual). Obviously the worker would not declare the etransfer income on their personal tax return.

I may be overthinking a simple issue.
 

kirby

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I read your post and was very, very concerned. Just bullet points:
1. Money paid to a worker is Wages Expense. Not a reduction on shareholder loan.
2. In US we are required to know precisely whom we employ to ensure they can legally work in US. Canada may have similar laws. You might want to look into this particularly given that you do not know the name of the person who worked for you.
3. You need a cash forecast to show expected cash inflows and outflows. Hopefully, your partner will bring in cash sales in excess of cash outflows. But you need to keep tabs on this.
4. You clearly need accounting help. Consider hiring an accountant at least short-term to organize things for you.
 
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