Shares and starting capital

[James Roberts]

I'm about to register an LTD company and am thinking about the value if shares to be issued as my accountant has told me that I will have to pay it. Now, the question is, if for example, I issue 1 share with a value of £10.000 during incorporation will it be my company's starting capital- will the money be physically available in my business account to use it? Thanks

 

[namesweb]

As far as I understand it, the value of the shares allocated on start up is to indicate your personal liability towards the business should you ever close the business with debts outstanding.

So if you allocate £10k per share and you try and close the business with £10k owing to suppliers and no cash in the business to pay down against, you personally as the shareholder are liable for that £10k.

If on the other hand you allocate £1 like many people do on incorporation you limit your personal liability to £1 even if the debts exceed that.

https://www.1stformations.co.uk/shares-and-shareholders/

As for what is physically available - that will be done via a new business bank account, where you as director will deposit money into, and on your books log against the Directors Loan Account.

 

[James Roberts]

Perfect- you've answered all my questions. Thank you!

 

[mattk]

if for example, I issue 1 share with a value of £10.000 during incorporation will it be my company's starting capital- will the money be physically available in my business account to use it? Thanks

If you put £10,000 into the company, then yes.

Generally speaking, most limited company shares have a nominal value of £1 and you issue 100 shares. The preferred way to inject money into your own company is via a director's loan, as this can be repaid at any time, with no tax implications, when the company has sufficient capital.