Hi there
I am doing some bookkeeping for a client, whose friend has paid in around £4500 into his business account to "help him out". He doesn't expect the money back any time soon (if at all) and doesn't want any share of the business. How should this be treated in the balance sheet? Just as a loan? And what (if any) are the tax implications?
Thanks
Replies (9)
Please login or register to join the discussion.
I've just had a very similar case...
I've just had a very similar case (plumber) who even got an email from the friend confirming it was a 'gift' to 'help out the business'...when I queried it & did a bit of digging he then admitted it was for helping the friend to FIT A KITCHEN!!
They're not stupid...they just think we were born yesterday.
Is there much you can do here except accept the explanation and put it to DCA? What difference does it make to you where it came from?
You said "cash"
You said "cash" paid in. Do you really mean "money" or was it actual "cash".
Coming from a money laundering / drug dealing background as I do I would find "cash" much more worrying than a cheque or bank transfer.
David
I Don't Get This...
Basil is of course correct in as much as if your client is indeed a limited company then you should think hard about the loan's origins: eg what is the relationship between your client company's director and the creditor? (since you're evidently keen to learn, a connected relationship might warrant an inclusion in the notes to the accounts).
But - and pardon me if I'm over-tired and off-target here - is it not the case that your client is a sole trader (in which event much of this thread would be a moot point)?