I'm currently wading through the Sage, we had some money invested into our business, we are a limited company, and I am not sure where to allocate the money in Sage....
Because you are a talking about a limited company, the ways of funding capital are different to a soletrader, or partnership.
I may be wrong on this, and I am sure others may correct me but it will need to be decided how the investment is going to be treated. It may also be dependant on the Articles and Memorandum of Association of the Company how new investors can invest money.
Investors are usually issued Ordinary Shares, Preferential Shares, Debentures, or simply loan the business for an interest payment. Each of which will be set up differently in Sage.
Can you expand on what the investor expects in return for their money?
The money was loaned as the business was struggling, and is being paid back on a monthly basis. Currently we are not accruing interest on the money, I'm sure that's not right either so I'm a bit stuck! We didn't want to issue the third party with Shares and they are not a Director or any part of the Company. The third party doesn't expect anything else back apart from the money invested.....
Any ideas? Hope this is enough information!
Bentley
-- Edited by Bentley on Wednesday 6th of April 2011 01:01:28 PM
I would be inclined to Dr Bank with the loan amount, and Cr a loan account in the 2300-2309 range. I would probably create a new one specifically for the loan (2301?).
As the loan is repaid CR bank and Dr Loan A/c.
This way the loan will appear as a long term creditor on the balance sheet.
If you do pay interest, you could journal Cr Bank, DR Loan A/c, Dr Interst Paid A/c (7903), which will reduce your loan and charge the interest to the P&Le as an expense
Don't forget to use T9 tax code, and give a narrative
