recording business assets for a start up?

Question asked by Geraldine Clare Ramsay 7 years ago

Hello

I've just started my company, and will be using computer equipment purchased prior to this for the business. How to I record this in Clearbooks? It is equipment I purchased for personal use over a year ago and now will use exclusively for the business. I would like the business to pay me back for it when I have generated enough income.

Simple explanation please, I'm still struggling to get the hang of accounting!

thanks

Geraldine

7 Replies

First thing you'll need to do from a tax perspective is put a current market value on the item - you can't introduce it at the price originally paid. As it's a computer, digging around the 'recently sold' section of ebay will probably be of some good use. Be sure to save down copies of your findings so you can provide backup to your valuation should HMRC ever ask.

With regards to the bookkeeping entries within Clear Books, there are a couple of different methods you could use but the easiest will probably be a quick journal. You'll need to first make sure you've got a Directors' Loan Account setup by going to Money > Bank Accounts > Add account > Directors' Loan Account. This account will keep track of all monies owed to you which you've loan/invested into the business (such as introducing a computer). You'll then need to create the Journal itself:

Tools > Journals > Create

Enter a brief description of the asset, date it as of your first day of trading, leave the number of journal lines as 2 then enter the following:

Account (Plant & Equip - under non current assets) £X debit (with X being the value you've placed upon the item) Account (Directors' Loan Account) £X credit (again with X being the value you've placed upon the item)

Finally, if you're keeping track of assets (which i'd advise you to do), you'll need to head to Tools > Fixed Assets to firm up the details.

Hope that isn't too confusing, feel free to shout if you need me to re-run through anything in more detail.

Kevin @ Platform Accounting

Self-employed or limited company?

First thing you'll need to do from a tax perspective is put a current market value on the item - you can't introduce it at the price originally paid. As it's a computer, digging around the 'recently sold' section of ebay will probably be of some good use. Be sure to save down copies of your findings so you can provide backup to your valuation should HMRC ever ask.

With regards to the bookkeeping entries within Clear Books, there are a couple of different methods you could use but the easiest will probably be a quick journal. You'll need to first make sure you've got a Directors' Loan Account setup by going to Money > Bank Accounts > Add account > Directors' Loan Account. This account will keep track of all monies owed to you which you've loan/invested into the business (such as introducing a computer). You'll then need to create the Journal itself:

Tools > Journals > Create

Enter a brief description of the asset, date it as of your first day of trading, leave the number of journal lines as 2 then enter the following:

Account (Plant & Equip - under non current assets) £X debit (with X being the value you've placed upon the item) Account (Directors' Loan Account) £X credit (again with X being the value you've placed upon the item)

Finally, if you're keeping track of assets (which i'd advise you to do), you'll need to head to Tools > Fixed Assets to firm up the details.

Hope that isn't too confusing, feel free to shout if you need me to re-run through anything in more detail.

Kevin @ Platform Accounting

Sorry, the formatting on that Journal post hasn't come out very nice. You'll want the two lines to look like this:

Plant & Equip (under non current assets) £X debit (with X being the value you've placed upon the item) Directors' Loan Account £X credit (again with X being the value you've placed upon the item)

Thanks so much, Kevin, that looks very clear! Really appreciate you taking the time to help.

Geraldine

A pleasure.

Clear Books is a great system, it's just a case of getting your head around what works best for you as sometimes the same outcome can be achieved in more than one way.

Just in case it's of use, all my clients have their director's loan accounts setup as bank accounts (Money>Bank accounts>Add>Directors loan account) and so all you have to do is make a "Money Out" of that account to pay for the asset, as if you'd made a payment for the item direct from your ordinary bank account, which has exactly the same effect as the journal above.

Running your DLA via the banking section is a great help generally for anything effecting you, so my clients will pay off their salary, dividend or expenses bills from here to put all the money owed to them in one place.

It's one of CB's best features.

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