How do I record Investment in the company?

How do I record Investment into the company? How do I record this? What option should I select when recording the money in?

Hi @emma. You may find this article of interest

That’s on the basis that you’re a sole trader. If you’re not, drop another message and I’m sure someone else could help you, as I’m only a sole trader myself!

1 Like

Yep that’s the one to look at for Sole Traders. For Limited companies (and on the assumption that those seeding capital are directors) you can log this under the Directors’ Loan Account.

The Directors Loan Account

In this case you’re making a transfer from the DLA to the current account. When the funds are repaid, you transfer the otherway. In the interim period the amount invested sits on the balance sheet as a liability.

Hi Guys, thanks for your help. So I need to record entries from an investor who provided a convertible loan - so they are not currently investors as such - but will become so later. Hope that helps - I am not a sole trader, but have a ltd company.



Is it better for me to create different loan accounts?

You need to create a new loan account for each lender/investor, tag the funds received into the business account as a transfer from the loan account.

Depending on the terms of the convertible loan on election, you may need to allot new shares and/or dilute existing shareholdings, which may give rise to tax implications, we would therefore recommend referring to an accountant.

This topic was automatically closed after 7 days. New replies are no longer allowed.