Investing In Stock Through Limited Company (Using Company Profits)

[philipthechilip]

Hi, I am investing my limited company profits into Stocks and Shares, and other investments directly (instead of withdrawing the funds as dividends, paye, or directors loan).

I am wondering how these transactions should be categorised in my accounting software (e.g. Quick Books or Zoho Books) so that my accountant can do my annual return correctly.

My understanding is that I/the accountant needs to re-value the assets each year, in order to make the necessary adjustments for the balance sheet.

Thanks for any advice.

 

[Bobbo]

What accounting standard are the company accounts prepared under, FRS 102 or FRS 105?

 

[philipthechilip]

I have no idea, this is for a relatively new company (set up in May 2023), so I haven't done my first set of annual accounts yet.

Is that something I can decide on now?

 

[MyAccountantOnline]

Hi, I am investing my limited company profits into Stocks and Shares, and other investments directly (instead of withdrawing the funds as dividends, paye, or directors loan).

I am wondering how these transactions should be categorised in my accounting software (e.g. Quick Books or Zoho Books) so that my accountant can do my annual return correctly.

My understanding is that I/the accountant needs to re-value the assets each year, in order to make the necessary adjustments for the balance sheet.

Thanks for any advice.

If the stocks and shares are purchased in your company name I'd show them as Investments and add narrative explaining exactly what it is.

If you are using company funds to buy shares in your name it'll be a directors loan (and I'd take advice from your accountant before doing that)

 

[Bobbo]

Probably worth thinking about - presumably your accountant can advise based on the nature and size of your business.

Reason for asking was that under FRS 105 you don't revalue, whereas under 102 you do.

I assume you are happy that holding investments within what might otherwise be a trading company is a sensible idea.

 

[philipthechilip]

Thanks, so it sounds like I need to create Chart of Accounts for each Investment, and then add the detail in there.

I'll ask my accountant, but just wanted to get an idea before hand.

The investments are through a corporate investment account, and will be in the company name (not my personal name).

I'm happy it's a sensible idea, but it has trade-offs like many other business decisions.

 

[pentel]

I assume you are happy that holding investments within what might otherwise be a trading company is a sensible idea

You might want to investigate the implications of this, especially in relation to business asset disposal relief.

 

[N-UPS]

From experience, I think you'll end up deciding this is not a good idea.