OK, probably a really stupid question, but it got me thinking (which is always a dangerous thing!)
Company not yet trading needs to file dormant accounts with Co House. Who do I charge, the Company? Are they allowed to pay it or do I charge the two Directors 50/50? Practically it's the Directors who would pay it anyway as there is no Company bank account in place.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I had a similar dormant account to sort out this week. I charged the company and recorded an invoice from me which was paid by the director and created a credit note to balance the invoice and remove from AP. I then recorded the money paid as a (hopefully) current liability owed to the director to be reimbursed when the company starts trading. This worked on QB but I am open to any other ideas.
Hope that's helpful
-- Edited by Hyperion on Tuesday 23rd of August 2016 03:17:22 PM
It is the company you should invoice and should be the company that pays.
But as i most dormant company scenarios the company doesnt have any money or sometimes no bank account so ends up the director who pays the bill personally.
So technically the accounting entry in the company accounts should be
Dr Accountancy fee £xx
Cr Director loan £xx
This would then make the company trading going forward.
Personally I would just ignore this and sort it out if and once the company starts trading. No one is going to bother not Companies House or HMRC.
Main thing is make sure you get paid before you submit anything.
Hi
I agree with Mark in that by invoicing the company it is then no longer dormant. But invoice the Directors and you may well be missing out on any carried forward losses for when the company is eventually trading again.
Also as Mark explains the double entry, I am confused by what you have done there Parmi, as in where is the corresponding debit for your DLA item given the credit note has cancelled out the invoice (also in your own business, it's cancelled out any fee income!)
If you get rid of the credit note, leave the invoice to be paid. Then at it viaan entry from the DLA. Not sure how quick books works in this regard, you may need to create a Directors Bank, pay a supplier invoice as usual, then clear the directors Bank from the DLA (sorry sage process, but like I say, not sure if quick books makes such easier)
Sorry for any typos, on rickety train with no glasses!!
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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
This is getting a little complex as the answers being given relate to companies that have traded and become dormant rather than companies that have never traded which seems to be the question being asked.
Nothing (and I mean nothing) except the issue of subscriber shares is put through the books as one is basically simply reserving a business name for future use
All transactions including your fees must be paid by the directors and not reimbursed from the company. Only when a company starts trading is all expenditure for the previous seven years is treated as though incurred on the first day of trading (and the DLA created).
HTH,
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.
Leger wrote:I take it from your comments that the Directors can then record my bill against their respective DLA's when they start trading.
Hi John,
Quite.
Its pretty much as though you need to keep two sets of books. One the old Excel spreadsheet to keep a record of everything until launch and then transfer it all accross to the proper books when the company starts trading.
Until the company starts trading its the directors who are responsible personally for keeping you and companies house paid.
The dormant company itself in many ways could be considered as a pre trading purchase that just needs a bit of ongoing maintenance ready for launch of the business.
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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.
