Start-up Assets

[NCapital]

Hi all,

I've a question about starting a business with some assets/cash/etc already in place.

Say I'd like to start a business by registering a limited company. But before I do, I do a number of things - I open a simple current account and add some cash to it (to be used by the business); I buy some office equipment for the business (such as stationary and a laptop); and I buy a vehicle to be used as a company car.

When I register the business, I'd like all of those assets to belong to the business, and to be used solely for business purposes. Is there a formal process of transfering the assets to the business? Or is it just a case of maintaining an asset register of some kind, and marking those assets as "existing" at the point the business is registered?

Sorry for the wooly question. I've been undertaking some personal endevours that I'd like to continue with under the umbrella of a limited company, so it means I've already got certain things (such as domain names, office equipment, cash reserves, etc) that I'd like the limited company to take ownership of. It just seems strange that I'd be able to start a company, and as if by magic, it already owns cash and assets without having undertaken any trading.

I hope that makes sense, and thanks in advance for any tips/info!

 

[Scalloway]

If the bank account is for a limited company you can only open it once the limited company is formed. You and the company are separate legal persons. If you use a personal bank account for a limited company it can cause tax problems.

When you form the limited company what you need to do is gather up all the invoices for the items you have already paid for. Make a list of them and what they cost.

In your accounting software add theses items to the relevant cost headings. The other side of your entry is Director's Loan Account (DLA). When the company has funds it can repay you with no tax consequences.

 

[Flatspin]

Personally I think it's better to add all the money you intend spend to the business for the purchase of assets at the beginning.

Say you add £15K, it's one transaction which goes to Director's Loan Account. All the purchases are then made by the business, and you will probably find it cheaper in terms of insurances, etc.

It also takes a lot of the hassle out of transferring insurances, etc.

I made the mistake of buying items over a period of years, and when you factor depreciation into the equation, you're supplying equipment to your business at a reduced cost.

 

[NCapital]

Thanks for the replies, they've been very helpful.

If the bank account is for a limited company you can only open it once the limited company is formed. You and the company are separate legal persons. If you use a personal bank account for a limited company it can cause tax problems.

I hadn't intended to use a personal account for a limited company, it's just that I already have an account open, with a small amount of funds in it that I'd like the business to use going forwards. I'd convert it to a business account when I formed the company, I just wasn't sure what/if I needed to do anything to make a note of the fact that the account already had money in it and that it was to be used for business purposes.

When you form the limited company what you need to do is gather up all the invoices for the items you have already paid for. Make a list of them and what they cost.

In your accounting software add theses items to the relevant cost headings. The other side of your entry is Director's Loan Account (DLA). When the company has funds it can repay you with no tax consequences.

Thanks, this sounds like the best way forwards. I'm not even looking to be reimbursed by the business for anything that I've bought personally, I just wasn't sure how best to document the fact that I'd be starting a business with some assets and equipment already pucrchased/in place for business use.

Personally I think it's better to add all the money you intend spend to the business for the purchase of assets at the beginning.

Say you add £15K, it's one transaction which goes to Director's Loan Account. All the purchases are then made by the business, and you will probably find it cheaper in terms of insurances, etc.

It also takes a lot of the hassle out of transferring insurances, etc.

I made the mistake of buying items over a period of years, and when you factor depreciation into the equation, you're supplying equipment to your business at a reduced cost.

Thanks for the tips. I guess it would have been better to start with a "clean slate" as it were, but as I say, I've already got some assets and funds in place that I'd like to transfer to the business once it's started. I think you guys have pretty much covered it though, thanks!