I have this client who owns two companies. One is trading and the other one was in the process of starting trade. So, he bought some goods using his savings for the new company (Director Loan) but now he decided to shut down the new company before it even started trading and will just continue with his current running one. The invoices for the goods bought are in the name of the new company which never traded and which he will be shutting down.
How would I treat this in the accounts of the new company before closng it down and also how would I trasfer these goods and DLA into the accounts of the running company in a way where the client doesn't loose out.
Basically, he wants to transfer that stock into his running company at cost so, that he doesn't loose out the DLA he invested (money he paid from his savings).
Can anyone suggest ways of recording this?
Replies (7)
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Old company sells the goods to the new company.
But you might have a VAT problem if the old company's not registered and the new one is........
Doesn’t deal with the DLA.
Dormantco sells to Director by way of clearing DLA. Director sells to Tradingco via DLA.
Doesn’t deal with the DLA.
Dormantco sells to Director by way of clearing DLA. Director sells to Tradingco via DLA.
Ach - that can be dealt with by moving money around. There's nothing complicated here.
Apart from the VAT.
Hi There, it is the new company(which hasn't started trade yet) actually selling the goods to the old company which is trading.
Thank you.
OK, new company sells to old company. Everything else is the same.
Imho, disposing of a company's assets isn't trading - provided it doesn't make a profit.
How regular a supplier and how user-friendly are your client's suppliers?
Might they be persuaded to issue a credit note to NewDormantCo, thereby accepting the return of the goods? And thereafter those suppliers issue a fresh invoice to OldExisting Co, thereby selling to them those same goods as "already paid" (by the director).