Shareholding, director's loan account, bank account reconciliation

Question asked by Maria Ingold 9 years ago

Hi,

Still slogging through historical stuff. Clearbooks support couldn't help with this.

When I set up my account 3 years ago, I had a shareholding of: 1000 shares of £1 each. So I transferred £1000 in from my personal bank account to my business bank account. That then got allocated to a director's loan account. So the director's loan account had £1000 in it.

Then I reduced the shareholding to 100 shares of £1 each. So I transferred back from my business bank account £900 to my personal account. That reduced the amount in the director's loan account to £100.

I need to reconcile my bank statement.

  1. How do I reconcile my bank statment to say the above?
  2. Where do I demonstrate this money isn't just "physically" in my business account but in my "virtual" director's loan account?
  3. And where do I show my shareholding number of shares and value of shares and the historical allocation change?

Thanks again.

Kindest regards, Maria

Write reply6

6 Replies

Hi Maria - as mentioned by Kevin above, if the £1,000 was for shares there should be no DLA movement, more importantly though if the company was set up with £1,000 of issued share capital, did you go through the necessary legal steps to reduce it by £900, eg the resolution and statement of solvency? If not then there's every chance the share capital is still £1,000.

Best answer
9 years ago

If you're purchasing shares and you've physically transferred the cash in, the DLA wouldn't come into it. Imagine the scenario:

You've create an invoice in your own name analysed to share capital - i.e. the company has sold some shares to you:

file

You then simply pay the invoice in the usual fashion, crediting the funds to the business bank account:

file

9 years ago

Hi Maria - as mentioned by Kevin above, if the £1,000 was for shares there should be no DLA movement, more importantly though if the company was set up with £1,000 of issued share capital, did you go through the necessary legal steps to reduce it by £900, eg the resolution and statement of solvency? If not then there's every chance the share capital is still £1,000.

Best answer
9 years ago

Clearsky Accountants supposedly did all of the necessary legal steps in 2012 for this. I am only logging historical records at this point.

9 years ago

Yes, I've found the formal Resolution to Reduce Share Capital. All done formally.

So, if I create an invoice to allocate my payment of £1000 for 1000 shares of £1 of share capital. What do I do to refund £900 when I reduce the share capital? Do I refund the invoice? Or something else?

Kindest regards, Maria

9 years ago

Don't create an invoice.

Make a payment for £900 and pay the money to you. The other side of the entry is Share Capital.

9 years ago

Just to confirm I wasn't particularly suggesting an invoice be created, I was just trying to give a visual to the explanation.

9 years ago

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