My own corporation's stock

[Timothy Wight]

Mike

Set up a 'Liabilities:Other Liabilities:Quixote Director Loan' account 
and show your $100 checking account deposit as a transfer from this 
account.  Also transfer out of this account any funds required to cover 
your out of pocket expenses.  This liability account is therefore 
accumulating the total debt your corporation owes you.

Create similar liability accounts for your other Directors and 
Employee.  When they earn some salary, show it as a transfer from the 
expense account 'Expenses:Salaries' or 'Expenses:Director Fees' to their 
respective liability account.

At some time in the future you will reimburse them/you by converting 
their loan into paid-up shares.  At that time, show the value of the 
shares as reducing their liability account and increasing the Equity 
account 'Equity:Issued Capital'.

Don't put off discussing this with an accountant as there may be tax 
implications for all in receiving shares in lieu of salary.

Tim



Don Quixote de la Mancha wrote:
> I just incorporated my company, in California.  The Articles of
> Incorporation authorized one million shares of stock, but none have
> actually been issued yet.  It's going to be some time before we are
> earning any real money, so for now everyone will be paid with equity
> in the company.
>
> I need help with properly accounting for my company's stock
> transations.  I do plan to talk things over with an accountant as well
> as an attorney but am not able to do so just yet.  It would be OK if I
> have to adjust my accounts after I get their professional advice, but
> I'd like a setup that I can work with at least for now.
>
> Today I opened a corporate checking account by depositing a $100 check
> drawn on my personal account.  My intention is to receive some stock
> in return for that investment, and to get more stock as I put more of
> my own money into the business.
>
> There are two other members on the Board of Directors besides myself.
> I don't expect them to invest any of their own money into the company,
> but I do plan to pay them with some stock for being on the board.  My
> hope is that they will knock some sense into me at appropriate times.
> :-D
>
> There is one other employee who is not a director, but whose labor
> will be paid for with stock.
>
> Because I didn't have a business checking account until today, I have
> been paying for business expenses out of my own personal funds.  My
> plan is for those personal expenses to be repaid with some more stock.
>
> We haven't set the price per share for the stock yet, but I expect it
> will be ten cents or so - it's a brand-new company with no real assets
> yet.
>
> So... how do I account for all this in GnuCash?
>
> These stock transactions aren't stock options or Restricted Stock
> Units.  There is no vesting period and no one is promised any
> particular number of shares.  Instead the stock will be sold in return
> for consideration, which can be in monetary form or for doing some
> kind of work, such as attending a Board of Director's meeting.
>
> When we actually issue some of the stock that is authorized, where
> does it go in GnuCash?
>
> I don't have many stock certificates, so I am planning to execute the
> stock sales once each quarter.  So I will need an account for each
> person who is owed some stock but hasn't actually received it yet, and
> then I will need to account for the actual sale when it is completed.
>
> I kept records of what the accounts should be for my out of pocket
> expenses - office supplies, technical books and so on.  I will need to
> submit an employee expense report that lists all the amounts and
> accounts, but then the total of that should result in stock being owed
> to me.
>
> Thanks for your help!
>
> Mike
>   
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