Investment in the business

abacus123 wrote: ↑

Sun Jan 28, 2018 9:44 pm

Dear Members

I am in the process of extending my Tier 1 Ent 50K route visa and this platform has helped me a lot to clear my ambiguity/uncertainty regarding my Job creation criteria queries.

I have got few questions regarding showing the investment in the company. Since the incorporation of company me and my other team member have invested 73k in the company. The funds were transferred from our joint account to the business account over the period of three years on whenever needed basis. My accountant has shown this investment in the financial statement in this way ; In the Asset section of balance sheet, 73k is coming as an Investment and in the long term liability section of balance sheet, 73k is shown as Director's Loan. My question is whether this is the correct way to show investment in the financial statements and if yes, do I need to create and send director's loan agreement with my extension application.

Many thanks

abacus123 wrote: ↑

Mon Jan 29, 2018 1:39 pm

Hi .. that was the reason I asked this question .. it’s coming as an investment in asset section .. when I asked this to accountant he said that where else you can show the investment in the company ?

bizman wrote: ↑

Mon Jan 29, 2018 9:12 pm

investment into a company first and foremost will be treated as an asset before further provision is made depending on the circumstances of the investment. In your case it is a loan and has to be treated as such. get a DL Agreement and attach to your annual account. Also ensure the bank statement showing the tranches of investment paid from your joint account to your business account is included

marcnath wrote: ↑

Tue Jan 30, 2018 2:55 am

bizman wrote: ↑

Mon Jan 29, 2018 9:12 pm

investment into a company first and foremost will be treated as an asset before further provision is made depending on the circumstances of the investment. In your case it is a loan and has to be treated as such. get a DL Agreement and attach to your annual account. Also ensure the bank statement showing the tranches of investment paid from your joint account to your business account is included

This may be a splitting of terms but an investment into a Company is a liability from the Company's accounts - not an asset.
When the investment is by transferring money into the companies bank account, it does CREATE an asset - i.e. a bank balance. Other ways of investing into the company may be cash (shows as cash in hand) or stock (when you buy things and transfer it to the company) and so on. They all show up as assets in the balance sheet.
But if, in the balance sheet, you have line that says Investment, then it generally means the Company has invested the money into something else (example, bought shares)