small starting business - initial sell of shares, capital raised and related questions

[David T.]

On Jan 28, 2013, at 7:07 AM, Krokodill Geena <krok.geena at gmail.com> wrote:

> On Mon, Jan 28, 2013 at 1:23 PM, Dustin Henning <The00Dustin at gmx.net> wrote:
>>        I think you would create a stock account and sell shares from it,
>> giving you income.  This would show the number of shares as a negative
>> number, and may not be proper from an accounting standpoint (since you
>> didn't short-sell shares of some other stock), but it would be simple.
> I actually tested this and it looked really wrong :)
> I will have a short position (- shares) and this is going offset the
> funds received. BTW, we actually like to use gnucash for rel
> accounting and not just toy around with it. :)
> 
> I attempted to resolve this little "problem" by setting up following accounts:
> 
> Equity:Share Capital*
> 
> (* Share capital or capital stock (US English) refers to the portion
> of a company's equity that has been obtained (or will be obtained) by
> trading stock to a shareholder for cash or an equivalent item of
> capital value. For example, a company can issue shares in exchange for
> computer servers, instead of purchasing the servers with cash.)
> 
> Assets:Current Assets:BusinessAccount (renamed form Checking because
> nobody uses cheques over here and I never actually seen one in my
> life, except in a american movie)
> 
> Everything started to look good but there is still one small problem.
> We know, how much cash each one of us has deposited as initial startup
> capital (and received a share in co) but there is no way to track how
> many total "shares" are actually issued.
> 
> What if I set up a Assets:Investments:XYZ and enter number of shares
> with 0 EUR per share?
> Will this start causing problems down the road and mess up our
> reporting at some later date?
> 
> Cheers.
> 
> 

Honestly, Mike's advice (to get an accountant) is REALLY on target. It sounds to me as if you're in over your head, and frankly, unless you like litigation and tax authority audits, then you'd be well advised to be well-advised. By a professional.

David