I purchased a company for £52,500 and paid 6 months rent as a deposit (I am trying to do my bank rec on sage) but the codes for these two expenses are not evident can anyone please help me? My VAT return is due so am desperatley trying to get this done,
Thanks
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They are not expenses
It's been a long time since I looked at Sage but you should have codes in the balance sheet section for investments (for the purchase of the company's shares) and prepayments or sundry debtors (for the rent deposit). If not there, you may have to create new nominal ledger codes.
Caveat - I don't do accounts or book-keeping, I do tax - I'm sure there are others here that can give a more precise answer.
I don't think there is a default Sage nominal code for investments (nor goodwill). If the £52,500 was for the company's shares I suggest you create a new code in the Fixed Assets range for the investment, say 0090.
When you say 'The Company'
is it actually a limited company or just a business? If the former you just need an 'Investment in (Name) Ltd' account. If the latter I think that you will need to show the assets acquired + any good will. I am rusty in this area vis-a-vis the tax position so hopefully someone may clarify.
ALSO - Is this (the new one) your only business or do you have an existing one? If the latter will you be running the new one stand alone or merging it with your existing? These are all factors that need to be considered.
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It depends on what has actually happened really.
1. If you have purchased the shares of the Company, from the individual who used to own it, I imagine the entries would be:
Credit B/sheet Director Loan with amount paid in advance for RENT
Debit RENT paid to P&L. You will need to account for a prepayment if you want to do accurate monthly figures.
The amounts to be allocated to cost of shares are irrelevant, the Company has not purchased or sold any shares - the individual has. This will also be your tax base cost.
2. If you have purchased the business from another via the medium of a Company (i.e. your Company acquired shares), the entries would be:
Debit B/sheet Assets with MV allocated
Debit Rent charge to P&L
Debit B/sheet residual as "Goodwill"
Credit B/sheet DLA with amount paid
3. If you subscribed for shares in the Company before purchasing (e.g. you have a share premium account) and then purchased the business out of a Company or from an individual you would do same as above except credit would be to Cash as you should already have entered Dr Cash and Cr Share Cap & Share Premium
Hope this helps.
Just had a thought, (I know, unusual!)
Are you talking about the acquisition of this company in books representing you as purchaser or are you setting up the books of account OF the company on a (?new) system? If you have purchased the company as a going concern it should already have books of account and a b/f p&l and balance sheet. The purchase of said company does not go into its own books but into your personal accounts and tax where relevant.