Premium for Buying business

[Sterling Services]

hi,

have a question...

When i started my business i paid £20000 premium for the business i took over ...

where i would i show this in my year end accounts, it was purchased with my own cash..

thanks for your help.

[jholden]

Not much detail? A premium, do you mean you paid £20,000 for Goodwill?

If it is goodwill it goes on the Balance Sheet under Fixed Assets as an Intangible Asset and the other side will go to Capital Introduced/Directors Loan Account depending on what structure you are.

Jason

[deniser]

It depends how it was broken down and apportioned in the sale contract - goodwill, fixtures and fittings, stock etc.

Each has a different tax treatment.

[Sterling Services]

i guess i would call it goodwill...as i just paid the previous owner of the business...there was no stock, and no fixtures and fittings involved.

its a limited company so should it be directors loan account or capital introduced, bearing in mind i would like to take this moeny back from the business in time...

[elainec100@cheapaccounting]

Directors loan.

[Sterling Services]

do i have to use depreciation on the fixed asset??

[jholden]

Generally yes, assets are depreciated and goodwill amortised.

Jason