Startup question re Shares

[JohnJones]

Hi

I setup a LTD company March last year and when setting up it asked me how many shares I had / needed / wanted (can't remember the exact phrasing)

Based on the only knowledge I had at the time I said 1,000 ordinary shares at £1.00 each

A few months later my accountant said I should have only said 100 shares as that would be enough

I put £100 into the business bank account when I opened it, as this was advised by my business manager to at least have some money in there before trading

My question is

Do I have to put in my accounts software (Freeagent) anything relating to the 'shares'

Do I have to put in £1,000 into the company for the shares

Or do I not need to do anything?

Thanks

 

[Yorkshire&Online]

It is entirely up to you if you physically put the money in or not, but if you don't, you need to allocate the amount for the shares to the Directors Loan Account (DLA).

This would be a journal entry (maybe you accountant could do it for you):

DEBIT: DLA £1,000
CREDIT: Shares issued £1,000

However, this will leave you owing £1,000 to the company ie an overdrawn loan account which may cause tax implications at the end of the accounting period if you do not credit any dividends to your DLA for example.

Suggest you get your accounatnt to explain it if you are confused, after all that's what we are there for!