Self employed to Limited Company

Hi Liam

Something similar happened with one of my clients a few years back and all I did was to run a P&L report for the self employed period, so that we could do their personal tax return then enter a journal entry to remove all the P&L balances at the switchover date taking the balances to the Director's loan account.

If you're unfamiliar with Journal entries (in the tools menu) have a look at the guide on:https://support.clearbooks.co.uk/support/solutions/articles/33000203293-how-to-create-a-journal

You may already know about the Director's loan account (DLA) in Clear Books, which is treated as an extra bank account, but if not, here's the guide: https://support.clearbooks.co.uk/support/solutions/articles/33000203288-setting-up-a-director-s-loan-account

So, using the P&L report Feb-July create a journal entry to debit all the revenue accounts and credit all the expenditure accounts with the numbers on the report which should leave you with a final line for the profit (or loss) which you would credit (or debit) to the DLA.

You will then have balances on other balance sheet accounts eg trade debtors, trade creditors and bank accounts which were your balances not the company's and the easiest way to move these to the DLA is to use the DLA bank account, rather than your actual bank account, to pay off all the unpaid invoices or bills at the July switchover date and to transfer the bank balance(s) at that date to the DLA. So you'll have to delete any bank explanations that went to pay off the invoices and bills after the switchover date and re-explain them using the DLA.

In theory, once you've transferred all the account balances to the DLA the DLA balance will come to zero at that date. If not run a Trial balance report at the switchover date which will list all the accounts with a balance, and transfer any missed account balances to the DLA. The objective is to get a Trial Balance report at the switchover date wit all zero balances, meaning that all self employed balances have been removed.

Hope that helps

Hi Liam

Something similar happened with one of my clients a few years back and all I did was to run a P&L report for the self employed period, so that we could do their personal tax return then enter a journal entry to remove all the P&L balances at the switchover date taking the balances to the Director's loan account.

If you're unfamiliar with Journal entries (in the tools menu) have a look at the guide on:https://support.clearbooks.co.uk/support/solutions/articles/33000203293-how-to-create-a-journal

You may already know about the Director's loan account (DLA) in Clear Books, which is treated as an extra bank account, but if not, here's the guide: https://support.clearbooks.co.uk/support/solutions/articles/33000203288-setting-up-a-director-s-loan-account

So, using the P&L report Feb-July create a journal entry to debit all the revenue accounts and credit all the expenditure accounts with the numbers on the report which should leave you with a final line for the profit (or loss) which you would credit (or debit) to the DLA.

You will then have balances on other balance sheet accounts eg trade debtors, trade creditors and bank accounts which were your balances not the company's and the easiest way to move these to the DLA is to use the DLA bank account, rather than your actual bank account, to pay off all the unpaid invoices or bills at the July switchover date and to transfer the bank balance(s) at that date to the DLA. So you'll have to delete any bank explanations that went to pay off the invoices and bills after the switchover date and re-explain them using the DLA.

In theory, once you've transferred all the account balances to the DLA the DLA balance will come to zero at that date. If not run a Trial balance report at the switchover date which will list all the accounts with a balance, and transfer any missed account balances to the DLA. The objective is to get a Trial Balance report at the switchover date wit all zero balances, meaning that all self employed balances have been removed.

Hope that helps