I am a sole trader in the UK andI want to inject some cash to pay for a new bathroom in my holiday let business. do I use the receive money record, referencing capital account>Username>contributed funds? If so how do I then show paying the money to the builder and myself back when the company has the funds?
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Yes.
Spend Money, allocating to the appropriate account. Depending on local tax law, this may be an expense account. Or it may have to be to a fixed asset, recovering the investment over time through depreciation.
Spend Money, allocating to your capital account. This is a draw.
Since you are a sole trader, you might be interested in a simpler way of handling equity. If you’re already well along using a capital account, it will be easier to stick with it. But if you are just starting in Manager, consider this Guide:
If you are a PLC then you would deposit the funds to a Shareholders/Directors Loan account and not Capital as you are expecting to be repaid and not issuing shares.
Thanks Tut, That makes sense. This is the first use of the capital account so I’ll investigate the guide for an easier method.
Brucanna, Probably shouldn’t have used the word company, my bad use of words as I’m new to this 'Accounting game". Thanks for the reply.
Regardless of being a company or not, if your intention is to be repaid rather then leave the funds as business capital, then put the deposit into a loan account so that your accounts correctly reflect the position. You wouldn’t put any other sort of intended loan as capital, so why this loan.