Mr. Bob bought a business for £ 200,000/ out of which £ 175,000 represent goodwill in the last year accounts (2013 when he purchased the business). Other side of the entry is showing director loan for £ 195,000/ and the balance £ 5000 as share capital.
Guide the best way of converting the loan into equity as he is right in saying that as he bought the business for £ 200,000/- so his equity should be £ 200,000 and not just £ 5000/-
Further due to this treatment by previous accountant his company's net worth is showing negative (just because of the treatment of his loan).
He want to have the equity positive, what is the best possibile solution without incurring the excise duty on issue of share.
Guide the best way of converting the loan into equity as he is right in saying that as he bought the business for £ 200,000/- so his equity should be £ 200,000 and not just £ 5000/-
Further due to this treatment by previous accountant his company's net worth is showing negative (just because of the treatment of his loan).
He want to have the equity positive, what is the best possibile solution without incurring the excise duty on issue of share.