I wonder, could a limited company take out a loan amounting to about the profit, then claim the debt as a tax-deductible expense, such that accounting for interest, the company makes a net loss for that year? And what about the company paying money into multiple ISAs?
Thank you so much. I have a question to ask if you don't mind. if someone start a business and spend some money as the capital and get a very low profit for that year, can we continue with that capital for the next year? How can I recover that capital? Thank you
Hi, great video, thanks for sharing. I have a question for you although not sure if it’s a dumb one but here goes. If retained earnings is profit after tax and you don’t need to submit a tax return (or pay) for 9 months after fiscal y/e how do you manage to close the year end TB, post retained earnings to balance sheet and start the new year TB if it could be months after year start before you compute tax return?
Great question. Normally tax is worked out at the point of preparing the accounts, and an 'accrual' is made in the accounts. This appears in the profit and loss, so it reduces the profit. There is a corresponding future liability in the Balance Sheet, so when you make payment later on it reduces this liability. Hope that helps!
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I wonder, could a limited company take out a loan amounting to about the profit, then claim the debt as a tax-deductible expense, such that accounting for interest, the company makes a net loss for that year? And what about the company paying money into multiple ISAs?
Hi Macro, there are several anti avoidance bits of law, along with some accounting principles in play that makes this unlikely to work.
Thank you so much. I have a question to ask if you don't mind. if someone start a business and spend some money as the capital and get a very low profit for that year, can we continue with that capital for the next year? How can I recover that capital? Thank you
If we've understood correctly, if you lent the business some money as capital, you could recover it when there is sufficient profit/cash to do so.
Hi, great video, thanks for sharing. I have a question for you although not sure if it’s a dumb one but here goes.
If retained earnings is profit after tax and you don’t need to submit a tax return (or pay) for 9 months after fiscal y/e how do you manage to close the year end TB, post retained earnings to balance sheet and start the new year TB if it could be months after year start before you compute tax return?
Great question. Normally tax is worked out at the point of preparing the accounts, and an 'accrual' is made in the accounts. This appears in the profit and loss, so it reduces the profit. There is a corresponding future liability in the Balance Sheet, so when you make payment later on it reduces this liability. Hope that helps!