So I registered a Limited company in April, and have started using QuickFile in the last month.
I set up a new bank account and paid in £135 as initial working capital.
The company then purchased my laptop and monitor for £650.
In May, after I’d been paid by my first clients, I paid back the £135 to myself and I also settled my invoice for the £650 purchase of Office Equipment.
I’ve imported by bank statements and tagged all the transactions and the balance is all correct.
Now I’ve followed the guide on registering the initial share, which I obviously didn’t do previously, and now I have the DLC showing £1 (positive) even though the Journal entry was a Debit (this is so confusing to me), and similarly when I enter the Flat Rate expense of £26 for working from home and pay it from the DLC, the Journal entry for (1201) shows a Credit of £26 for this account, and the new balance on the DLC is £25 (negative).
Does this mean that I need to physically deposit £1 into the bank to signify that I own the single £1 share that was created when I incorporated (which would be the same as only reimbursing myself £25., correct?), and what are the consequences if I don’t?
It is confusing but correct - debit transactions on a bank account (or any other asset code) are money in to the account, credit transactions are money out. So a positive balance in the DL account means that you owe money to the company, a negative balance means the company owes you.
You’ll be used to seeing it the other way round (credit in, debit out) on the statements your bank sends you, but remember those statements show “you” from the point of view of the bank, whereas QuickFile is showing the bank from the point of view of your company - if you have money in the bank then that is an asset to you but you are a liability for the bank.
1 Like
This topic was automatically closed after 7 days. New replies are no longer allowed.