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    • wonderlandstorenz

      Business Owner

      @wonderlandstorenz

      How do I account for funds i put into the my business to start it up?

      Question submitted 01/06/21 @ 04:39pm

      I started my business by putting 1000 into it. I had spoken to a friend who is an accountant and they said i can say that this was me buying the shares into the company. But in terms of actually accounting it to IRD, how can i account for this? I also realise now that 1000 was not enough and i need to put some more into the business. How can i put more funds into the business?

      Category: Accounting
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      • Bianca Cornford

        Industry Expert

        @bianca-cornford

        Reply submitted 01/06/21 @ 04:39pm

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        Regarding this $1000 start up money (seed capital), please code it as “equity” in your accounts.
        This is not your income (revenue) for your business, so this is not taxable revenue for IRD when you file income tax return at the end of financial year.
        If you want to invest more money in, please continue code this as “equity” in your accounting book.
        This “Equity” will be shown on your balance sheet. I strongly recommend you use Xero software for your accounting software.
        Regarding the shares – this requires you to register them with the company office and create a “equity shares” entry, so is slightly more complex and not required.

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      • Steve Mundy

        Industry Expert

        @steve-mundy

        Reply submitted 01/06/21 @ 04:39pm

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        The initial $1,000 put into the business could either be reflected as paid up share capital or Shareholder Funds Introduced. Your company accounts would normally have a shareholder current account which reflects the transactions between the shareholder and the company. Introducing funds into the business would be reflected through the current account. You can put more funds into the business at any time and this is reflected by increasing the bank balance in the company and increasing the balance of your current account. Easiest way to track these transactions is typically by setting up a Xero file for your business.

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