CH Abbreviated Accounts Form

[TwinStar]

Hi,

I'm looking for a little advice. I'm trying to help my wife return the accounts for her small business (Ltd Co) using the CH Abbreviated Balance sheet for online submittal (and what a horrible form it is!).

I know the ideal would be to get an accountant to do this, but having already made a small loss in the year, this isn't really an option for us.

I've been able to fill in the CH balance sheet with no problems, except for I'm not sure where to account for the money she has personally invested in the business. In the full accounts, we have an equity account that holds this amount, but I cannot see where to put this on the CH sheet.

Can anyone clarify this for me please?

Many thanks in advance.

[accountancyextra]

Twinstar,

Do you mean invested in the company or leant to the company. If the former, it would appear in the capital account, if the latter as a directors loan, which would be a creditor in the balance sheet (I suspect you mean the latter!)

[James Smith]

hi,

Its would normally be listed as a directors loan. You state you have it listed as "equity" in the full accounts which may mean this is not how you have set it up. It is possible to form a company with share capital paid for generating a 'share premium account' but its not normally how its done (or beneficial). Very hard to say what you might have done I am afraid, but the most likely answer is a directors loan.

I should point out when you do appoint somone to act for you it is quite likely that they will want to either re-state your DIY accounts or possibly close the existing company and opening a fresh legal entity rather than get involved in the past transactions. This obviously costs a lot more than doing it right the first time, so any savings by DIYing on this are likely to come back and bite you later on I am afraid.

Out of interest why did you decide to form a company in the first place? There seems to be a rash of ltd co's at the moment that have been formed very early on well before the business model is proven which is leaving owners struggling with the paperwork on their own. I am wondering where this advice is coming from as it seems very damaging to me although I appreciate you may have had specific circumstances which forced you down this route.

NB for anyone else reading this, normally where there is the possibility of losses in the first year and there is not too much trading risk you would choose to be a sole trader or partnership and be able to claim loss relief and get a tax rebate, and also be able to do your own tax return a lot more easily. Ltd cos are generally only suitable once the business model is proven and you are making £20-30k PA, or the business faces particular trading risks.

Edited to add - posted at the same time as the above.

[accountancyextra]

James,

looks like our posts crossed.

Your points about where the advice is coming from and struggling with paperwork are spot on

[TwinStar]

Thanks for the prompt replies.

Having done a bit more research, it is a Director's Loan that I'm talking about.

On the subject of the Ltd Co, we can now see it was the wrong way to start things up, but when we were setting things up it seemed like the right way to go. Hindsight is a wonderful thing!

I'll have another go at the accounts tonight, and see if I can get things straight - fortunately they are very simple, so this should be quite straightforward.

I realise I'm making all of the accountants reading this cringe!, but we really cannot afford to hire a professional to do this so I'm having to rely on books and the kindness of strangers! (thanks )

[James Smith]

Don't worry you are not the only one by a long shot....

And apologies for using you as a bit of an example for others, I have a bee in my bonnet about this at the moment, and like to help others by showing what not to do!

[TwinStar]

No need to apologise at all! I'm really grateful that you're willing to take time out to help.

Unfortunately, I think most of us "small business virgins" go through the process thinking it'll all be simple, and it's not until we get stuck that we start searching for specific information and find all the really good advice. Obviously by then it's a bit late

[Indizine]

I wonder if the name thing has got people buying company names. Ive seen loads of poeple asking should they registe the limited company name a s way to 'own' their domain name or business name.

[James Smith]

You might well be right indizine, there seem to be this idea that you must "claim" a limited company "name" as if it has some sort of value on its own like a domain name can have. They seem to miss the point that the name is merely a label (which can be changed), what you are buying is a legal structure.

Its a basic misunderstanding that seems very common. Perhaps you should have a "top 10 start up myths" sticky dealing with this and other common issues?

Just generally with companies I think it doesn't help that it is incredibly easy to form a company these days. £20 and 20 minutes and you have yourself a new born baby company, but just like real babies it doesn't come with an instruction manual and the really hard bit is that its invisible and you only know its been crying for months when you snotty letters from CH and HMRC or you speak to somone in my profession who tells you that despite your best efforts you have been feeding it poison and you don't hold it that way up!

[Recruitment1]

I think if people took the time to read the Ltd Companies Act, they would be alot more knowledgeable.