You can make a loan to the company and repay it but you still have toIs it legal for someone who has just changed their business from sole
trader to a private limited company, to 'introduce capital' by making a
loan to the company (to avoid the hassle of issuing shares)? And to
withdraw capital by repaying such a loan?
Dependent on the Mem&Arts you may need to only issue 1 share the restYou can make a loan to the company and repay it but you still have to
issue shares.
Don't forget the issue of valuing the goodwill (if any) to beIs it legal for someone who has just changed their business from sole
trader to a private limited company, to 'introduce capital' by making a
loan to the company (to avoid the hassle of issuing shares)? And to
withdraw capital by repaying such a loan?
The reason is because accounting is based on a few principles and the[1] Thank you everyone for such a generous answer to my question.
[2] I would be very grateful if you could suggest a textbook that would
cover the bases so I don't have to trouble you so much. All the texts
I've come across are like Frank Wood's Business Accounts Vol 2; they
seem to restrict themselves to introducing the differences between
entries for a sole trader and those for a public rather than a private
limited company. A textbook detailing the differences between the
entries for a sole trader and a private limited company is really what
I imagine I need (or are the differences so sparse that a text would be
overkill) (or so vast no text would suffice)?
Most succinctly put, sah!Peter Saxton said:The reason is because accounting is based on a few principles and the[1] Thank you everyone for such a generous answer to my question.
[2] I would be very grateful if you could suggest a textbook that would
cover the bases so I don't have to trouble you so much. All the texts
I've come across are like Frank Wood's Business Accounts Vol 2; they
seem to restrict themselves to introducing the differences between
entries for a sole trader and those for a public rather than a private
limited company. A textbook detailing the differences between the
entries for a sole trader and a private limited company is really what
I imagine I need (or are the differences so sparse that a text would be
overkill) (or so vast no text would suffice)?
entries are easy to work out once you understand accounting. If anyone
tries to make accounting entries without understanding they get in a
mess.
The differences will (ordinarily) be:sagelist said:[2] I would be very grateful if you could suggest a textbook that would
cover the bases so I don't have to trouble you so much. All the texts
I've come across are like Frank Wood's Business Accounts Vol 2; they
seem to restrict themselves to introducing the differences between
entries for a sole trader and those for a public rather than a private
limited company. A textbook detailing the differences between the
entries for a sole trader and a private limited company is really what
I imagine I need (or are the differences so sparse that a text would be
overkill) (or so vast no text would suffice)?
What I've said here is correct but I should make clear that this is aTroy Steadman said:Assuming there is no parallel trading the Assets and Liabilities of the
Sole Trader business disappear down a black hole on the last day of
trading, reappearing out of an equal and opposite black hole in the Ltd
Company on its first day.
As the other have hinted, unless you are confident with this it would be
a good idea to pay for professional advice.
If a sole trader invoice gets paid into the limited company that is aWhat I've said here is correct but I should make clear that this is a
retrospective journal made as long after the changeover as possible to
allow everything to wash through the Sole Trader accounts.
There should be no Trade Debtors, Trade Creditors or Bank Balances to
carry across, just Fixed Assets, HP Liabilities, Bank Loans,
Prepayments, Accruals.
Nobody *ever* gets this right. New VAT scheme, new PAYE scheme, new Bank
Accounts, same customers unaware that they are dealing with a different
entity, is a recipe for a cock-up extraordinaire! Which is why...
What about Jon Griffey's Goodwill? Goodwill is my least favouritePeter Saxton said:You need to ensure that the balance doesn't show you owing money to
the company so you have to monitor it and make payments to the company
if necessary.
There is likely to be a chargeable gain on the transferee.Troy said:What about Jon Griffey's Goodwill? Goodwill is my least favourite
fungible asset, my tax brain is notoriously tax-hopeless, but even I can
see there must be *big* things to consider here?
How do you value Goodwill?
Presumably it never appears in the Sole Trader Accounts but:
DR Goodwill
CR Directors Loan
...in the Ltd Co is a handy start.
Is there a Chargeable Gain at that point in the Ltd Co? How do you
write Goodwill off?
This is the point your friend with the funny website was pointing outWhat about Jon Griffey's Goodwill? Goodwill is my least favourite
fungible asset, my tax brain is notoriously tax-hopeless, but even I can
see there must be *big* things to consider here?
Within reason you do whatever you want.How do you value Goodwill?
Perfect start.Presumably it never appears in the Sole Trader Accounts but:
DR Goodwill
CR Directors Loan
...in the Ltd Co is a handy start.
Why should there be a chargeable gain? It's a purchase.Is there a Chargeable Gain at that point in the Ltd Co? How do you
write Goodwill off?
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