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  • #979187
    paulsails
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    Hello all,
    Very very new to the forum and to proper bookkeeping for that matter, so please bear with me.

    I have recently commenced entering all my bookkeeping transactions into a small software program (GNUcash) instead off collecting quarterly bank statements, receipts and cheaque butts for a basic spreadsheet printout.

    My first question regarding bookkeeping principles is how do I insert my ATO carry over losses from year to year? I send my paper work off to my accountant for my EOFY Tax statement but at present do not see were I can insert this into the hierarchy of accounts in the programme.

    My second question is what is the best method of showing my personal capital injection into the business ? as my company does not have a designated credit card I utilise my personal credit card and some times use my personal bank account to pay bills. Once again what is the preferred method utilising the hierarchy of accounts.

    To date all my bank statements reconcile with the GNUcash application, I know it is pretty basic stuff but then I am in new territory.

    Cheers Paul

    #1112675
    yourvirtualboard
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    Is your business a company or are you a sole trader?

    I’d suggest a dedicated bank account for the business to make your life a little easier (whether company or sole trader).

    If company – let your accountant handle the losses carried over (they appear on your financials / balance sheet). Money in can be recorded as a loan by you to the company. When using your credit card just fill in an expense claim to have the company owe you the money.

    If sole trader doesn’t really matter – it’s all assessed as you anyway.

    #1112676
    Just Launch
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    Hi Paul,

    Harry is pretty much spot on. All contributions by you towards business expenses should be recognised through a loan account.

    Leave the carried forward losses to your accountant. If you want to check the amount of carried forward losses you have, look at your previous financial years income tax return.

    John Whale CA

    #1112677
    paulsails
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    Thank you people for your replies,

    I did reply to your posts but I am not sure why it has not shown up, anyway I will try to remember how I answered last time.

    My company is a Pty Ltd and it does have its own Bank account but no credit card for reasons I am sure that you understand.

    I understand the loan theory idea, just have to implement it within Gnucash, I am not so sure about the expense claim? what will be the best way to set this up? I dont really have to perform a physical exercise of reimbursing myself?

    As for the losses carried forward, yes my accountant does perform the basic requirements as per ATO doctorine, but I would like to show in my own records as near as practically possible my companies true financial position.

    cheers and thank you, Paul

    #1112678
    yourvirtualboard
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    If you’ve spent money on the company’s behalf then by all means you are entitled to be reimbursed or again this can be credited against your loan account.

    Financial position – as long as the program you are using can show a balance sheet and you have every sale (income) and purchase (expenditure) up to date you should be able to have an accurate reflection.

    In my opinion forecasting cash flow is a more beneficial use of your energy as what you are looking to do is all retrospective.

    #1112679
    AGMBris
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    Hi

    Some good advice here already but just a note, losses carried are not a cash element but rather something that will be applied any profits in this company you are referrring to (assuming it meets the guidelines of course).

    Your accounting software should give you a snap shot of position but be sure to do the cash flow as this is more representative of what you have and where you need to focus. Don’t forget that 30% (roughly) of what you make is not the company’s!

    This is where the previous losses come in though if allowable to decrease the tax payable in current year.

    #1112680
    James Millar
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    Carry forward accounting losses are different to carry forward tax losses. Over time the disparity between the two will grow based on differences between the calculation of accounting profits (for financial statements) versus taxable income (for tax). There are also differences in the type of tax losses that can be carried forward (regular versus capital losses).

    You don’t need to enter the tax carry forward losses into your accounting system but you will need to enter the negative retained earnings (accounting losses) carried forward from previous years. As a temp solution just debit retained earnings in the equity section and credit your loan account (liability). The amount should be the value of the accounting losses.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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