Small Business set up tax question

"How do we show it" - in what?

Usually you will raise a purchase order for the items which will affect stock on hand as an asset and purchases.

My accountant usually offsets my drawings by any "capital contributions".

The rest of it is dependent on the accounting system and probably should be directed at your accountant

geek_king1, Jun 11, 8:44 pm

Yes, stock and plant becomes part of the capital invested in the business.

But best advice is, get some professional advice (find an accountant).

geek_allan_mac, Jun 12, 12:31 pm

Generally you start purchasing after you start your business. Why not just sell it / transfer from yourself to the business and take drawings out to cover it. Or just list it under 1st April with a note why.
But as others have said se a good accountant.

geek_macman26, Jun 12, 5:26 pm

This is accountants territory.

geek_richardw13, Jun 12, 6:22 pm

As mentioned previously get an accountant. You should have got sort some advise before purchase. There is nothing worse that trying to sort out someone's paper work when they don't think they need any professional advise until too late down the track. Have you considered the GST implications at all?

geek_joanie04, Jun 12, 6:45 pm

Right to bring in your stock and plant you need to do the following:

Debit Opening Stock for the amount you paid and also debit plant for the amount you paid. The corresponding credit entry should be the total of those to figures and it is called capital introduced.

Date it 01 April 2015 and write a note explaining that this was the initial cost paid by yourselves.

geek_joanie04, Jun 13, 8:31 pm

John - when you open your books of account you "bring in" the assets and liabilities of the new business. So as at 1 April 2015, your balance sheet as at that date will be:-
Liabilities $1000 Assets
Stock $1000

Totals $1000 $1000
There you go, a perfectly balanced balance sheet.
From then on you can post any other transactions of the business right through to 31 March 2016 when you have to do your Financial Statements for the year.
Me thinks you need to do some bookkeeping study. See an accountant who will tell you what you need to do and what records to keep. You will probably only need to keep a Cash Book and your accountant can do your Financial Statements after 31 March 2016.
And talk to the accountant about GST - seems to me that you should register for GST as soon as you think/know you will go over the registration threshhold ( and that seems to be now). Your accountant will tell you what is needed in a Cash Book and to file your GST returns. Accountant will do those returns for you - for a fee of course. DON'T SPEND THE GST YOU COLLECT. THAT BELONGS TO THE GOVT!

geek_mariner26, Jun 13, 10:40 pm

The other question is this a completely new business or an existing business? Either way some advise from an accountant should have been undertaken prior to set up. There is more to running a business than doing the work, collecting the income and paying the bills. A lot of accountants will give free or discounted rates for an initial consultation.

geek_joanie04, Aug 20, 9:08 pm

Share this thread