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Sole Trader - Accounting for capital introduced

I’m trying to account for personal money that i’ve put in to the business. I read online that it’s called “capital introduced” but I can’t find a category that matches that.

Any pointers are much appreciated.

Tag as a transfer from the ‘Proprietor Drawings Account’, you may find the posting below useful:

Thanks Joe. So do I pay tax on capital introduced (on tax return) ?

No there is no tax on capital introduced

Hi Joe, Have read your thread here but could do with a little more assistant with my specific situation, if possible.

I am a newly-formed sole trader business (general gardening). I didn’t start with any capital (largely because there were no significant up-front purchases to be made) and, to date, have shown cash ins and outs in my business current account.

If say I wished to put £500 of my personal cash into my business (as capital), what entries would be required in QF and physically/in reality?

Also, if I decide to pay myself a wage, I understand I need to show this as withdrawals of profit - correct?

Grateful if you can help on these points. many thanks

£500 cash introduced to business, entry will be

Dr Bank Current Account
Cr Capital Introduced for Sole Traders

Drawings would be
Dr Proprietor or Partner Drawings
Cr Bank or cash

You can record this from bank or cash a/c screen by clicking input New transaction

So the debit entry in the bank will increase my bal by £500. I have raised it as a new trans’n (as money in). It now needs to be tagged. What type of trans’n do I go for as I don’t understand your credit leg? In this case, would I have to physically deposit £500 into my natwest business current account?

If you have actually deposited cash in bank or physically added cash to business petty cash then once you done entry on bank or cah then click on tag and select
Something else not on this list and then type Capital Introduced for Sole Traders.

If you are buying stuff for business then you would record normal purchases and credit Capital Introduced for Sole Traders rather then bank or cash

what do I select at the ‘Post to Account’ question?

Capital Introduced for Sole Traders

That’s not available on the drop-down list. Should it not be Proprietor Drawings account (1202) as Joe advised in an earlier thread?

You need to type Capital Introduced for Sole Traders , if its not showing up then credit to drawing is fine too, it will have same effect

Sorry to be a pain…final check on this. I have worked a dummy (practise) example through QF, adding £100 as capital introduced. The effect on the balance sheet looks ok in that bank is up by £100 and £100 shows in current liablilities (prop’s drawing account, 1202). Looking at nominal code 1202, it shows the £100 as a credit entry. Does that all sound correct to you?

yes that looks fine.

Hi, I am new in doing accounting as well. I am interested to know what accounting software you guys are using.

Thanks!

Hi @Bumi_Jade_Jaya

The queries above relate to our software, QuickFile.

You can find out more about QuickFile here: www.quickfile.co.uk

SIR,
I have sole prop. business and i transfer 5000 in my current account from my saving account than what will be the jounal entry in my books of account.

I would tag the money when it arrives in the current account as “something not on the list” and assign it to a nominal in the 3xxx Capital and Reserves section - if you already have a capital introduced nominal then use that, if not you can create one in the relevant section from the chart of accounts screen.

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