Based on my thought. on Capital account feature, with in adequate presentation of handling ordinary shares.
The issue with capital account summary does not record balances of each sub-accounts it only records the movement. Let’s say I’ve insert Ordinary Capital Share as the sub-account of Capital Account.
At the same time is beneficial to have the share capital to attributable to its share members. Which current module of Capital Account are working right now.
The idea of mine. is to allow the sub-capital to map in to control account features which then link to user created equity account.
although by design seems way round about. Unless there is better way of handling share capital which is common to present in balance sheet while retaining Manager unique modular features. I be happy if the share capital issue is being address appropriately.
You wouldn’t do this, create Ordinary Capital Share as a sub-account of Capital Account.
You would rename Capital Account to be Ordinary Capital Share, then you can attribute share capital to the share member’s sub-account.
The Mr Bossku (Director) account - distinguishing the record of operation - SHOULD NOT be an Equity account. Only accounts relating to Share Capital should be under Equity.
@brucanna, I need to make use of expense claim as director’s remuneration which under capital account tab. I map the capital account’s control account to Share Capital Equity Account. so the one with ‘director’ are under ‘capital account’ instead mixed in share capital. The my answer assertion is managing director and stakeholder are commonly one of the same person. At one point the Managing have tendency do capital injection. This is non issue for me as I already map it as separate account of equity (Capital Account and Share Capital) not under sub account within capital account tab.
If you are talking about a corporation with ordinary share capital then it’s plainly wrong to have both Capital Accounts and Ordinary Share Capital under Equity.
With a corporation (with ordinary share capital) then the only items that appear under Equity, is the value of that ordinary share capital and retained earnings. Every other type of transaction relating to a Director such as “expense claim as director’s remuneration” gets allocated to a BS > Liability (or Asset) account titled - Director Hassan C/A (current account).
All Directors, regardless of them being a stakeholder / employee or not, have a BS C/A for all transactions that don’t related to ordinary share capital.
How do you treat director injecting cash in the company without interest and maturity date?, the condition imposed of once the company is stable he wants his money back. This is the sole reason of the way I design the Chart of Account.
Would you not record that as you would record any other loan? The fact it is unsecured and with someone who is also a director should make no difference in Manager
Which is why a loan document is required if there is more than one share holder specifying interest and repayment conditions. Should be relatively easy to write during the honeymoon phase but would be more closely examined during the separation.
When such thing are written out it may highlight different perspectives / assumptions.
The founding directors can of course inject funds in different ways. Buying shares. Interest payment with shares.
I don’t think buying shares is efficient when we know he will inject more in future. (cash) literally.
However, patch thank you. you gave me an idea that the documents are needed for it. An explanation or declare regarding nature of transaction with shareholder’s acknowledgement signatory. The good thing is the said director is an actually managing director and holding the most shares compare to other shareholders.
One thing I want to avoid is taxmen deem it as interest and despite it was for on going concern purpose.
Check with your tax authority, @acecombat2. Some consider loans at below-market rates as generating taxable income for the business in the form of interest forgiven.
