ACCOUNTING FOR START UP MONEY (LTD)
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- เผยแพร่เมื่อ 14 ก.ค. 2024
- Starting a new limited company and wondering how best to account for the money you put in to start it? In this video Dan runs you through some of the key points to consider.
Topics include:
Ways to introduce money to your new business
Funding your new business
Share Capital
Directors Loans
Family Loans
Crowdfunding
… and more!
If you have any questions on this, please comment below.
You can see more about what we get up to on the following:
LinkedIn (Dan): / danheelan
Instagram (Dan): / danheelan
Podcast: heelanhub.co.uk The HeelanHub Podcast, a show for small business owners.
Join our mailing list for tax tips at: www.heelanassociates.co.uk
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Facebook (Company): / heelanassociates
Twitter (Company): / heelanassocs
Web: www.heelanassociates.co.uk
Call: 02392 240040 Email: info@heelanassociates.co.uk
#accounting #businessaccounting #startup #sidehustle #tax
I just came across this video after searching for a while for the answers contained in this video and I must say you've really explained it the best 👌.Thank you for this🙏
Glad it was helpful!
Amazing informative videos. Keep up what you are doing !!! Very professional
Glad you found them useful!
Exactly what I needed
Glad it helped!
Great video, learnt a lot watching all of your content! Would be great to know how this translates to sole traders setting up.
Will add to the list!
Great channel!! could you please also do a video about capital allowance or company assets pool , how to deduct tax when you buy assets …
Will add to the list :- )
Hello,
Thank you for the useful info. I'm watching all your videos. A friend of mine just started a limited company to sell products online and, last week he opened a business account. I advised him to transfer some money from his personal to business to buy the products he wants to sell and record it as equity investment. Do you agree?
Glad you are enjoying the videos. I think it’s likely most tax efficient in general (but not always) that funds introduced by the director open and are records as a ‘directors loan account’. Search up some of our videos on this subject for a longer explanation.
Amazing video!
I have a question about director's loan. I have just switched from a sole trader to ltd company. Let's say i put £15000 into the companies business account for expenses etc. Can i take this money out to my personal account at anytime? since it was my own money that i put in, and what's the correct procedure to do so.
Effectively yes, see here HOW TO START (OPEN) A DIRECTORS LOAN ACCOUNT
th-cam.com/video/EfIgxZyHjZk/w-d-xo.html
Brilliant. Thank you.
I am in the process of switching biz accs from an online B acc to a high St. I ran my first year as a beta test, but do need funding to scale up. Any advice or video on optimising funding opportunities?
Funding is difficult outside of a start up loan. You might find you can get one of those still, but they are effectively personal loans.
Main thing with any funding or investment is making sure you have a provable, profitable business model and have financial info to back that up (historical info or cash flows etc)
For bigger amounts there are platforms that can help, and you tend to look then at making sure your business qualifies for ‘EIS’ which is a relief investors look for.
Hi Dan, I’ve just done a crash course on accounting via your vids! Thanks for the info. 1 question I have for you - i’ve put £1500 in my business as a directors loan. The turnover for the year is £3000. The cost of sales/expenses is £1300. Do I with draw the remaining £1700 as £1500 directors loan and the rest as a dividend. Or do I withdraw the £1700 as a dividend and keep the directors loan in the business. However if I do this, wont the £1700 then be subject to corp tax at 19% reducing it to £1377? I think I’ve got that right but would love to hear from you. All the best and keep up the great work.
Hi Ben,
So 3000£ - 1300£ = £1700 profit.
19% tax on profit 323.
Let to 'distribute' = £1377 as you say.
You can choose what to do then. Depending on overall state of business/profits, you could pay the full, or part amount in dividend.
And/or you could pay some/all back as a directors loan.
Had to describe all options in a comment/without knowing your situation but hope that helps!
@@HeelanAssociates Hi Dan, I've just seen this thanks for responding! The last question then is can I only pay the directors loan with the profit the business makes, not general turnover?
Hi Great Vid's learning loads! A quick question; Starting a Ltd co with 2 50/50 directors (brothers). On day one they will each bring stock products into the business that they have purchased from their personal funds. Products will be sold to generate revenue in the business.
So lets say director A brings £3000 of stock in and director B brings £3150 of stock. Can this be set up as TWO directors loans ie a directors loan per director? Or does it have to be one slush pot with independent records kept of who is owed what outside of the "the books". Hope to use Xero so if answer could be given in the contexts of Xero that would be fab!
Yes just set up two director's loan accounts. (Go to chart of accounts in Xero and create another current liability).
Are you allowed to pay the money owed to you, directly back from the business account into your personal account or do you have to go through a formal route of payment like dividend to regain the amout due to you?
I dint quite understand that.
And does the 9month penalty on the directors loan apply if the company owes you money
The physical movement of a dividend is usually just paying from business bank to personal. The formalities of a dividend is what makes it so. More here:
www.heelanassociates.co.uk/dividends-what-you-need-to-know/
..and no the 9m 'tax' is only about loans TO you as a 'participator'.
So I assume I could buy the assets of a sole trader using the director’s loan into my new Ltd company and therefore avoid corporation and dividend taxes on that value as I draw it out over time?
Also, does the director’s loan have to actually pass through the Ltd company bank account or can I buy the assets and later create the Ltd company and account for it as a loan on the books retrospectively?
Thanks, useful video.
The creation of a directors loan account via purchase of the sole trade assets is a fairly common thing to do (few tax rules around what/how to navigate however).
You wouldn't remove the corporation tax by doing this (it's based on profit), although you may get some tax relief on the assets - that's hard to cover here in a general comment.
The dividend taxes however, that is correct you could draw against the loan account and not need to use dividends, therefore avoiding the personal tax. As mentioned in the vid.... you might not want to always do this however.
Hi, I am just wondering apart from single cash injection to a company as a director loan how do I need to record all the stock purchases, equipment, stationary etc which I used from my own cash & account before having a business account as that was using my money. Can it also be captured as a directors loan. I have put it as expenses in quick books which I am just learning. Thanks for your time
Yes is the short answer!
If you enter them into your quickbooks, and are still owed the money back, you can 'pay' the bills off to your Directors Loan account.
Have a look at this short series, might help: th-cam.com/video/EfIgxZyHjZk/w-d-xo.html
Great video, could you answer a question about withdrawing Directors Loan. If I put £12,000 into company at start up & then over period of 1st year took salary of £12,000 there would be no tax for company or me personally but Directors loan would still be in place, what i'm struggling with is if i then took the £12,000 Loan out of the company in same year the company would have paid Corporation Tax on £15,000 to leave net £12,000. i.e £3,000. tax. If I took the £15,000 gross as additional salary I would pay Income tax on £15,000 leaving £12,000. The liability seems the same either you pay the 20% tax personally or your company pays it by Corp. Tax. Therefore is there other uses for the Directors loan that I'm missing ? .
National insurance is the missing piece if i've read your write up correctly. The company pays it at a lower threshold than individuals also... so you have both employERS and employEEs to consider.
Amazing video!
Do I have to have a proof of me (or my mom) giving money to the company from our side?
I have the business bank account with transactions on it (as the proof from the company's side), but from my personal side I don't have the proof that I sent money to the company (for technical reasons).
Wil that be an issue?
And generally, do I even have to provide documentation for such transactions at some moment?
Thanks in advance and thanks a lot for your quality content you provide.
Evidence of some sort would be good to retain, but ultimately its about recording it correctly in the company records. You would only need to provide evidence in most cases if you had a HMRC investigation.
@@HeelanAssociates Thank you so much!
Hi Dan, If there are 3 shareholders, and one of them a director. Is there such a thing as a Shareholder loan account? like the director's loan account? So if a shareholder took money out of the business this could go to a loan account in the same way as a DLA, and then written off with a dividend or salary. Or can this only be for directors?
Its possible, its often known as a 'loan to a participator' there are just less favourable rules.
Very interesting video, thank you! I have a couple of questions, can tools and equipment purchased with personal money be counted as a directors loan and be paid backed to myself, or is this a separate deal? Also, does the company have to pay any tax on directors' loans or share capital? Thank you once again!
Yes usually ok, but depends on circumstances. Have you seen these vids? Director's Loan Guides
th-cam.com/play/PLkzy-8ym2nIj1hfsAO_33WYn3yZpJedLv.html
Hi if we've been trading for about 3 months as a sole trader and then switch to limited, do we start our accounts fresh or do we carry it on?
Two different legal 'entities', so new sets of records/accounts. Some items may carry over though, depends on the practical elements. This explains more: th-cam.com/video/FFE9RFxrnjY/w-d-xo.html
Hi anyone in the comment or yourself that I can talk to about directors loan please really confused
Have you checked out the directors loan video playlist?
@@HeelanAssociates yes just confused are you able to help out? Do you have a email?