I would very much appreciate some advice on the below issue. I apologise in advance for its elementary nature but these are my first returns.
Im employed myself but Im also the director of a company I opened with a friend as a hobby/side show. I created the company on Nov 13 and have to complete my accounts relating to Nov13-Nov14 by the 28th of july 15. When I opened the company I gave it share capital of £1. Subsequently I spend roughly 13k for supplies, stock and exhibition space. some of the money was paid through the company account and some through my own personal account for ease of use given I only had a cheque book for the business. What i never did was to increase the shares of the business. is this something I can do now to reflect that 13k have been "poored" into the company. there is nothing iffy about the expenses by the way, no travel entertainment or substinence all pure stock buying. I did look into professional advise and was quoted £850 which to me sounds rather steep for a company with 0 sales so far and 20 lines of expenditure. Im sure an accountant can sort this in 30mins.
Does anyone ahve any advice as to how to deal with the above?
If you own the company jointly you should both have at least 1 share each, and both shares need to be "paid for". You can do this by doing a journal from the Directors Loan Account and the Share Capital account. The amount of shares isn't important, as long as it accurately represents the share split between you and your business partner.
Ltd Company accounts are not for the faint hearted, so you should ensure you know what you're doing or otherwise employ an accountant. Given the low value of transactions it's possible you could halve the figure you've been quoted, but it does depend on how much is involved in completing your accounts.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I would suggest that you invest in the services of an Accountant who can get the structure of your company set up correctly. Im not sure what the quote of £850 would cover you for, but you can of course do some more shopping around. I would suggest that this is more than a 30 minute job for an Accountant, but it is worth considering that you arent just paying for 30 minutes of their time, but their expertise, knowledge and advice gained from studying Accountancy over many years. I would suggest you need an Accountant to sort out the share structure (which on the face of it seems wrong), produce the final accounts, submit the accounts to Companies House and HMRC; advise on the loan you have given (including items spent from your personal account); any write downs of stock, expenses that should be reflected but arent etc. I would also suggest that you have a conversation with regards to the direction of the company given the fact that you have zero sales within 12months - is this something that realistically needs winding down or have you had some sales past the first year end point?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi John
They do not necessarily have to be 'paid for' at this stage do they? You can have fully paid or unpaid shares (or part paid). Obviously with unpaid then a shareholder retains the liability to pay at a later date.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
firstly many thanks to all for the kind replies. I do take on board all your comments. the company has correct structure i.e. me and my friend have a share of £1 each, what i didn't do is to subsequently issue shares to reflect the money I spend on supplies etc. not sure if this is a big mistake or something easily mediated
i think weighing all your feedback I should probably seek the advice of an accountant indeed however given the uncomplicated nature of the company (as I mentioned above roughly 20 receipts to be logged) i thought the 850 quote was unreasonable. I have all the details and logged in myself to the HMRC page today and started filling in the return. It isn't rocket science but there are a couple of points I'm unsure about thus I will enlist a professional. If you have any suggestions for anyone who could be more reasonable about it all please do message me
again many thanks for taking time of your Sunday to reply to my thread
Hi Joanne. Not really, but I think its best to, as there can be a liability for tax on unpaid shares @ 25%. I think you made a brilliant point in suggesting an accountant to sort the share issue as they can structure it the right way.
Back in 2008 I did the books for a friend of mine and he had made a loss, the books where then passed to an accountant and there was a circa £250 tax bill. It puzzled me at the time as the guy had made a loss but it became clear when I gained a bit more knowledge. He had allocated himself 1000 shares which were unpaid.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
firstly many thanks to all for the kind replies. I do take on board all your comments. the company has correct structure i.e. me and my friend have a share of £1 each, what i didn't do is to subsequently issue shares to reflect the money I spend on supplies etc. not sure if this is a big mistake or something easily mediated
You don't need to issue any more shares unless you want to. The money you have put in to the Company is a debt owed to you, and should be recorded as such, correctly, in the accounts. Joanne also mentioned about recording stock. Your stock is an asset and should be recorded as such.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
There was some confusion in the first post in that the you said you had set up the company with share capital of £1 yet now you say you have £1 each.
Which HMRC page are you completing? Assuming its CT. You should prepare the accounts and tax computations first before completing anything online. It may look simple on the face of it but you can incur a lot more costs if you complete this without giving full consideration to what you are doing first as unravelling a mess is costly and could involve fines from HMRC. Sorry - dont mean to sound like Im lecturing you as that is far from what Im doing - I am suggesting you protect both you and the other shareholder by seeking professional assistance.
Part of the reason I suggested an Accountant is in relation to your comment about the money you have 'invested' for supplies. It MAY be more tax advantageous to keep this as a loan/you need to consider the implications if you convert this to share capital - hence it is professional advice you need.
Oh and I forgot to mention earlier if your year end date is Nov then you have another month to sort this out, so hope that helps
There are a few bods on here who may provide a quote - will leave that up to them. Im guessing from your forum name you are London based - might be a good idea to get quotes from outside London?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thank you, yep I'm definetely getting someone to sort it for me. I guess all I need to do now is get some quotes. I don't expect it to be £100 but thought £850 to be toppy to say the least (maybe I'm mistaken)
Hi Joanne. Not really, but I think its best to, as there can be a liability for tax on unpaid shares @ 25%. I think you made a brilliant point in suggesting an accountant to sort the share issue as they can structure it the right way.
Back in 2008 I did the books for a friend of mine and he had made a loss, the books where then passed to an accountant and there was a circa £250 tax bill. It puzzled me at the time as the guy had made a loss but it became clear when I gained a bit more knowledge. He had allocated himself 1000 shares which were unpaid.
Hi John
I was just really trying to suggest that all is not as it seems on the face of it. On the paid/not paid - depends on the Articles of Association as to whether they allow unpaid or part paid. Actually - if this is done under the 'standard' AAs - maybe they only allow for paid - not something Ive looked at. Also - have to say Im not sure on the tax issue on unpaids now - hasnt there been more recent case law to say that there isnt. Not my bag. Im sure Shaun will come on to correct us if he isnt swamped in work or killed off the grandparents or listening to the Nolans and rocking backwards and forwards in a straight jacket, lol.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Oh Joanne, that had me very much LOL (laughing out loud )
Would be interesting to read Shaun's prospective, as it's possible that my understanding is wrong. I was under the impression that share capital needed to be paid within 9 months of the year end to avoid being liable for tax, but I'm happy to be corrected.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Wonder if there are any comedians out there who used to the bookkeepers or accountants? Dont worry though John - I wont give up my day job.
'Standard' - shouldve read 'model' Articles. For Companies Incorp on or after 28 April 2013 - article 21 states All shares to be fully paid up 21.(1) No share is to be issued for less than the aggregate of its nominal value and any
premium to be paid to the company in consideration for its issue. (2) This does NOT apply to shares taken on the formation of the company by the subscribers to the companys memorandum..
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Could I kindly ask any members of this forum who happen to be qualified to prepare one's accounts to get in touch with me with a rough quote?
Much appreciated
the quote that you have had seems quite reasonable and pretty much a minimum that most accountants would contemplate to take on a new limited.
As noted by Joanne you are paying for the someone who has spent many years studying to be able to help you. Think about that where someone has spent at least five years studying and a further three gaining the experience required in order to be allowed to offer to assist you.
When one takes on a new client there are engagement procedures to consider including money laundering checks.
The accountant may also incur software costs tracable directly to each new client such as the pay per client fee's from the likes of Sage and cloud software companies.
If an accountant is working for you then they are not working for someone else so there is also the opportunity cost of lost income.
For a limited company there is annual filing with companies house, review of all of the evidence backing up your bookkeeping, applying adjustments in line with UK GAAAP, preparation and filing of accounts with HMRC and Companies house in pescribed formats, preparation and filing of a CT600 (short), then there is advice and guidance that they offer plus in this case reviewing and possibly correcting the companies house records associated with your company.
And as cream on the cake, assuming that the accountant that you have gone to is a practicing chartered or chartered certified (ACA (ICAEW, ICAS, ICAI) or ACCA) their filings will hold more credibility with HMRC.
I would consider £850 to be quite cheap if the accountant is with one of the above major professional bodies.
There are cheaper options out there but I am reminded very much of the car advert where someone is buying a parachute or shark cage... Do you go for the cheapest option or the safer option?
All comes down to one's attitude to risk.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
in addition to the above, qualifications aside also ensure that you feel comfortable with your accountant as its a long term relationship (I've had some marraiges that have lasted for less time than some of my clients!) and you really need to regard your accountant almost as a part of your business.
Some accountants (the better ones) get that and other don't.
If your reasoning behind the issues with the accountant are that you did not feel comfortable and confident with them then walk away. If it was purely money and they have the right qualification then I would reconsider what you feel is expensive for the work that they are doing for you.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
the likelihood of me listening to the Nolans is as likely finding me as guest speaker at the ICB conference.... Now must get back to listening to Tina Charles (lol).
But before I do...
Unpaid share capital.
Take it to the DLA so that they are fully paid up as unpaid shares cannot vote on dividends so any dividend issued would be illegal.
100% share capital it would seem in this instance is £2!
Laters folks,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thank you, yep I'm definetely getting someone to sort it for me. I guess all I need to do now is get some quotes. I don't expect it to be £100 but thought £850 to be toppy to say the least (maybe I'm mistaken)
Hi There
We are a firm of chartered accountants (ICAS) based in central scotland. We have fixed price fees that start at £720+VAT for limited companies but that includes accounts, company tax return, personal tax returns, payroll, annual return etc.
If you have no sales and a handful of expenditure transactions and just need the accounts and company tax return done together with the directors personal tax returns we could probably reduce our fee to about £400 + VAT.
If you would like to discuss further drop me an email to mark@stewartaccounting.co.uk
I am currently on holiday in Menorca but back to work on Wednesday however still picking up emails.
Have a look at our website, address below, that tells you a bit more about us, as well as the clients we work with and more importantly the testimonials for the many happy clients we have. We have about 200 small businesses like yourself that we act on behalf off.
the likelihood of me listening to the Nolans is as likely finding me as guest speaker at the ICB conference.... Now must get back to listening to Tina Charles (lol).
But before I do...
Unpaid share capital.
Take it to the DLA so that they are fully paid up as unpaid shares cannot vote on dividends so any dividend issued would be illegal.
100% share capital it would seem in this instance is £2!
Laters folks,
Shaun.
Hence the only reason you would be listening is in a straight jacket! Mute point in this case re the divis although I must remember to do that DLA movement in mine - almost at the first year end since incorp (although of course I was a sole trader before!)
So - dare I ask about the tax issue on unpaids?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
lol.
