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How to record bought shares

Question asked by Zeinab Abu 2 years ago

Hi We bought shares from a company and I was just wondering what would be the correct way to record it on the system.

6 Replies

Hi Zeinab,

For this, you should probably create a new account code under Assets and then a normal Bill for the share value, using this account code. You should speak to your accountant to make sure that you have the details correct when doing this.

Thank you! What would you do in case of selling shares from your company?

Would it be the same if you were selling shares from your company? I would like to sell 20% of my company shares to someone but I don't really have any shareholders set up. Can I still do it the same way? Money in through bank account and select shareholders in equity or with the created shares account code in assets. Will I be able to reconcile this way?

Yes, you can do it in the way that you described, though you should pass this by an accountant to check that it's the right way for you.

If you are to issue shares, the system provides a way to log everything and keep track of it (you will have to set up shareholders for those to whom you are selling shares).

e.g. https://clearbooks-support-screenshots.s3.amazonaws.com/neyWoqwV4pq36P75AhKOcioyeYfRit2gXH3uC3BOIXKWrRjVubAKoYVTrXZyfYxI67hjXzOIq8RkE2xk89XsBFkGaCCpaJh7lnUwwQP12mY7iOCB3SH2RmHhRo8c5st05Np5DeG74eCGHM3PNGKngJGbK1mWknCvqk5m3j0.png

Zeinab - there seems to be a bit of confusion here. Is your company Limited by shares? If so, you will have a share, or number of shares, already issued, and so these should already be in your books as share capital wit the shareholder(s) listed in the dividend tool.

To "sell" 20% of the company to someone else you have two choices:

  1. Issue new shares to yourself and/or the new shareholder, to get the 20:80 split, paying the new share money into the company as share capital.
  2. Sell 20% of your shares to the new person (this may involve issuing more to yourself first). Any money from the new shareholder does not touch the company's books, it goes to you.

With regard to selling shares in another company you have to work out the profit or loss on the sale and recognise that in an extra account called something like "Profit/loss on sale of investments". The account Aran mentions that you set up to record the purchase should only ever show the cost of the shares you still hold.

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