Opening Share Capital

Opening Share Capital

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Very straight forward one. When a new company incorporates with say, one Director who is the only shareholder, has shares of say £1 x 1 share and the money isn't actually paid into the bank, I always debit the DLA. However, I was talking to another accountant the other day who said that any opening share capital which isn't paid in the bank is always treated as being paid into the bank whether it is or isn't. When I queried about bank reconciliation etc he said that the amount is so small it doesn't make any difference. Rather slack in my opinion or am I just too much of a perfectionist these days?

Replies (9)

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By petersaxton
03rd Sep 2010 08:05

Idiot

He's an idiot.

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By geoffwolf
03rd Sep 2010 10:23

Easier

to treat is as cash in hand

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By petersaxton
03rd Sep 2010 10:44

What I do

If there's a sufficient credit balance on director's current I will debit that.

Otherwise I will treat as cash in hand.

I never treat it as unpaid share capital as it's very mickey mouseish.

Are you sure this person didn't mean treating it as cash at bank and in hand?

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
03rd Sep 2010 14:41

Peter

That's twice you've made me laugh in as many days, today with your first reply here, and yesterday with this https://www.accountingweb.co.uk/anyanswers/starting-small-practice-0

Thanks! :)

PS: I also debit the DLA.

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By petersaxton
03rd Sep 2010 15:13

Great

I'll try to go for the hat trick then.

I hope you don't laugh at something I say when I'm trying to be serious!

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
03rd Sep 2010 17:00

Thanks

Does this mean I have to stalk you now?! On a Saturday too? ;)

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By petersaxton
03rd Sep 2010 17:20

Always

It's compulsory but I warn you I'm never serious on a saturday.

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By Richard Willis
04th Sep 2010 20:25

I know it's a bit of a technicallity

but isn't this illegal?  Do the principals on incorporation not sign that the money has been paid?

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By petersaxton
05th Sep 2010 07:20

No

I don't think so. They are simply subscribed for. That would mean that in the event of insolvency then the money can be demanded.

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