I have been reading financial reports for years, but not creating them! Also, never for a trading company (only voluntary organisations). I am now using this software for a new company I am setting up, and have a small number of shares that have been created for the company.
In the Chart of Accounts, I created an Equity account called Share Capital and then used Receive Money in the Bank section to bring the share capital into the company.
I have also enabled the Capital Accounts and set up my family trust as a member (it owns the shares). What I canât see is any way to link the ownership of the shares to my family trust member. Is it assumed that the only member will own all the shares? How would I add new shareholdings to any new members that might be created in the future?
How many entities are you setting up? I think you have actually two entities. One company and one trust. Trust has beneficiaries, company has shareholders.
So in the first accounting entity (company), you would have an account called âShare Capitalâ. In the second accounting entity (trust), you should enable âCapital accountsâ module and possibly rename the capital accounts account to âBeneficiary loan accountsâ which would be more appropriate.
But first before you do anything, clarify with your accountant you have actually two accounting entities. Not just one.
I think Iâve figured out my mistake. I created the âShare capitalâ account as an equity account before I enabled the capital accounts option and created the member.
Once I created a new share capital sub account under the capital accounts and edited the receive money transaction to put the share payment there (linked to the trust membership), everything looked like I thought it should.
Apologies for my confusion and thanks for your replies.
I refrain from creating new post. as I had similar confusion.
Which is the best practice for recording common stock / ordinary share?
until now I use Capital account to record private limited companyâs ordinary share capital (sub-account). When I look again at balance sheet and capital account summary. How do I know how much ordinary share capital left? When I Set the report period for the following year. It only shows Opening balance from the Capital Accounts amount owing to shareholders. Can we have both knowing how much sub accounts opening balance while at the same time know owe to how much to which shareholders?
This situation requires me to actually hold additional record just to know balance of sub accounts. If I create a coa ordinary share capital, I wonât able to get the list owed/contributed by each shareholders in Manager concisely.
So to be safe, is not to include share capital under Capital Accounts as sub-account. The presentation of share capital have to be clear. The Capital Account Summary only records the movements. but not detailed balances for each sub-accounts.
One thing I did suggest about having multiple-sub accounts under special account tab. Can cater the situation Iâm in. Weâre not only have listing of employees, customers, and suppliers. We have share holders, membership for club, Tenant for indirect income, loans and what not. Iâ, still wondering why the suggestion have yet to discuss though.
You can use different capital accounts for each status and divide/group them under balance sheet with control accounts. Than register movements with journal entries.
Or maybe you can get some output through custom reports.
The later option doesnât come out of what I expect. Not useful.
The idea of using control account. I had in mind for awhile using special accounts as (listing shareholder/members) then assign to appropriate coa accounts. This made capital accounts less relevant. and made expense claim limited to only employee or dedicate expense claim payer. The only problem is the special account didnât have sub-accounts so is a bit messy. Since it will lump every different listing under the same page ahahaha.
however Since there is search feature which can filter to only what we want to see (specific listing) is adequte.
create Equity Account (Ordinary Share Capital) with Control account map to Capital Account in COA.
then Create two same name with distinguished label, in my case Mr.Bossku(Director) who are directly managing the company, and the Mr.Bossku(Ordinary Shares) This is to distinguish the record for operation and stakeholder matter.
Map Mr.Bossku(Ordinary Shares) to User-Defined Equity Control Account, My case is Ordinary Share Capital within Capital Account Tab.
It may have the same name with other shareholders, all I have to do append national identity card number or passport number. So you have 2 Equity Account. The system account âCapital Accountâ and user-defined account (Ordinary Share Capital).
I view Mrbossku(Director) are relevant in Capital Account Summary as he is directly communicate with shareholders. Plus at some scenario (starter up) the Director usually inject their fund either as loan or buffer cash since he/she may want the money back without interest (not as capital) after the company created their accounts in banks.
I rename Capital Account Summary as âStakeholders Summaryâ since director commonly are included as stakeholders.