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Question about Reimbursement Claims towards Owners Equity
I purchased some assets (computers, speakers, monitors, software) for my company with my own money as I didnt have a business credit card then. Now I am closing the year and have made journal entries using Journal Accounting for expenses in the specific category and then credited the same to Owners Equity. As my company is incorporated, I wanted to check if it is preferable to park these credits in accounts payable or owners equity. Can I park some credits in Accounts Payable and others in Owners Equity. Thanks in advance.
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Self-employed
For corporate work, everything you spend for the company goes to your shareholder loan account. It is part of the liability and equity section, but the shareholder loan is the correct account. All money that you take out of the company is also booked against the shareholder loan. If your shareholder loan ends up in a debit balance, which means you took out more money than you contributed, your company must issue you a T5 for other than eligible dividends for enough to get your loan back into a debit or nil balance. The money you take from your company is taxable. It is not appropriate to use accounts payable for shareholder transactions.
As far as the assets are concerned, they should each be in the $500 range to list them as assets to the company. The purchase price, including PST is the cost debited to assets and credited to shareholder loan. You would also have used your shareholder loan to purchase your shares of the company. Keep in mind also, that if you choose to make the items assets of the company, they are no longer yours. If you dissolve the company, you will have to buy them back at market value.
If this is the first year for your company, there may be a number of questions I can answer. Please ask.
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Self-employed
First year has been very busy in go to market and iterating the service but now I am getting to doing the relevant paperwork in order. A second follow up question is whether we can claim back GST.HST on our purchases made for the business and are there any exceptions ?
Thank you in advance and it is greatly appreciated.
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Self-employed
http://www.balancecounts.com/tip.php?sample--chart-of-accounts
The first filing of the T2 will set your year end. It begins at the date of incorporation and goes to where you want your year end. For instance, if you incorporated on March 3, and wanted an October 31 year end, your first filing would be March 3 to October 31. Your next year will run from November 1 to October 31.
You should have registered for GST at the time of incorporation. If so, you can claim the ITC's. If you did not register, you will use the full purchase price of assets and the expenses, including the GST. You will only charge GST if you are registered.
I will be in and out over the silly season, but I will check back later to see if you have any other questions.