Help!

[Hollie]

Hi guys,

My parents have just purchased a company and I will be doing their accounts.

The previous owners of the company had some of the assets on finance, however when the company was purchased the previous owners paid the finance off, but they have left the balance still showing as owing in the aged creditors, I know I need to credit this amount off but Im unsure as to which nominal account I should post the credit to? Any help would be greatly appreciated.

Thank you Hollie

[James Smith]

Hollie,

if your parents have purchased a limited company chances are they have not "taken over" a pre-existing limited company, but purchases the assets and trade and placed this in a fresh limited company. Which would mean you should in effect be starting a fresh set of books, but possibly transferring some things over as specified in the purchase agreement, but generally the old co. is responsible for paying old creditors and collecting old debt.

I would speak to the accountant that advised your parents on the purchase and get some help about starting from the right point with the bookkeeping. There are lots of different scenarios here and if you start from the wrong point it would get messy ongoing so its a lot cheaper in the long run to get it right.

Sorry I don't have a specific answer, but this scenario shouldn't actually occur!

Regards,

[Hollie]

Hi James,

thanks for the info, they have informed me they have taken over the limited company.

Thanks

Hollie

[James Smith]

I see. Well I think I do. Obviously I don't know the circumstances but are you 100% sure this is what they where advised to do (and have actually done legally)?

All I can say is speak to the accountant who is looking after you as a matter of urgency, [and check its a proper one and not a cowboy with the sort of qualifications you just pay £1,000 for no questions asked] as this is odd from both a commercial and tax point of view.

NB if you don't have an accountant then this is not really my thing, so I am not trying to drum up work here. Just raising my eyebrows very highly indeed. Hopefully I am completely wrong and there are excellent reasons for this option being chosen.

Regards,