Where to record business equity in your personal books

DaveC49 davidcousens at bigpond.com
Sun Jun 18 07:43:42 EDT 2017


Hi Adrein,

I agree you would record the investment in a company as an asset. I don't
know about elsewhere in the world but when you start a sole owner private
company in Australia, you essentially become the only shareholder and the
value of the share is the paid up capital of the company and has some
implications for the legal liability of the owners for the debts of the
company provided you have traded in accordance with the provisions of the
company law. You can call the asset account whatever you like but something
like 


Asset:EquityinCompanyA         Dr $1000
Bank:Cash                                                 Cr $1000

should be a reasonable way of recording it. 

You would then treat drawings/dividends from the company as Income in your
personal books. The taxation aspects will be a lot more complex depending on
whether the income is taxed in the hands of the company or it's owners and
or both, which will be highly dependent on local taxation law. 

David Cousens



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