Personal Business and Income/Profit/Investment

[Maf. King]

On Wednesday 03 November 2010 07:32:35 Jhonnatan Perkins wrote:
> Hello all.
>
> I am going to make an example, you guys please follow along and tell me if
> there are any flaws on it.
>
> Let's say you plan to buy a Plasma TV for cheap from China directly from
> the manufacturer. Then you plan to make a capital gain from it. Let's
> suppose it was a business you are making and there are tons of TVs from
> China, and you keep a book for your company (we won't talk about it now).
> But also, since you intend to use the profits for buying yourself a ticket
> to... Spain? Then somehow you'll mix your personal book with your company's
> book.
>
> So this example is from the personal perspective (aka NOT your company's
> book).
>
> *So you invest the money in your company
> Assets->Current Assets->Cash In Wallet->(-)$1,000
> Assets->Investments->Your Company->(+)$1,000
>
> *Now you sell the TV and get a profit (you sold it for $1,200).
> --Something happens in your company's book, not shown here and not of
> interest.--
>
> *So you get profits out of your investment
> Assets->Current Assets->Cash In Wallet->(+)$1,000
> Assets->Investments->Your Company->(-)$1,000
>
> Income->Profits->Your Company->(+)$200
> Assets->Current Assets->Cash In Wallet->(+)$200
>
> Now Cash in Wallet has $1200, which means you covered your investment and
> gained a profit. Now your investment stays at cero (0).
> Now you can make a Expense or do something with that money.
>
> Are there flaws in this scenario?

Hi,

There are usually tax implications involved when companies make a profit, 
and/or make payments to investors or staff.

The precise details of the tax is subject to local laws and how the company is 
set up, and I suggest that an accountant who is well versed in the tax laws 
of your country would be better able to help you than this list.

HTH,
Maf.