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Post Info TOPIC: limited company


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limited company
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Is it difficult do do accounts for limited company? is it different from sole trader?every book for accounting show how to prepare accounts for sole trade but is nothing about limited or is mentioned just little bit. I trying to do accounts for limited company where is just two directors.they put to a business account the same amount of money.is those money is a capital or investment?  there is maximum 60 invoices during a financial year.



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A limited company is different from a sole trader in many different ways, not least because the money belongs to the company and not its owners, until they extract it in the form of salary, dividends or directors loan repayments, for example.

There is a lot that a limited company has to disclose in its accounts - information about the convention the accounts are prepared under, its main accounting policies, transactions with related parties, transactions with directors...the list goes on depending on the size of the company.

If the company classes as small, it can prepare accounts under FRSSE, which means disclosures are limited and can also file abbreviated accounts to Companies House instead of the full accounts.

As for your directors - if they have 'put money into the business' then for a start their share capital (if applicable) needs paying and then the rest is a credit to their individual directors loan accounts. It is not an 'investment'.

Dr Cash at Bank
Cr Directors Loan Account (Person A)
Cr Directors Loan Account (Person B)

This money can then be taken by the directors tax-free if the cashflow of the company permits.

You will need to ensure your software is capable of producing proper limited company accounts (one example is Sage Accounts Production) and also verify that the disclosures are correct (Pentana Disclosure Checklist is ace for this).

So a lot more work - remember sole traders don't have to file accounts, they can produce accounts to support their tax returns and for managing the business' finance. Limited Companies must file accounts by various deadlines, which will need verifying on a case-by-case basis.

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Martin Oxby ACA
Nene Business Services Limited
Peterborough Bookkeepers|VAT Consultancy


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Hey Magdalena,

I deleted this post. What I wrote was not regarding you. I am too tired nowadays. I need a long holiday...

-- Edited by attilabenko on Sunday 3rd of October 2010 09:01:48 PM

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Attila

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