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Post Info TOPIC: Book keeping entries for payments for a business made by another business during set up
samsonite


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Book keeping entries for payments for a business made by another business during set up
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Hi there :)

I have a book keeping question.

I have a small business (Biz A) and recently started another business (Biz B) with a friend of mine. During the setup stages Biz A paid out around £1000 for things like domains, websites, etc. on behalf of Biz B. I have all the expenses marked out accordingly in my book keeping software (Quickbooks Online) and receipts saved.

I want to transfer the £1000 from Biz B to Biz A so that Biz B can claim the tax deductible expenses. How do I balance the books?

Someone I know said to just lump all the Biz B expenses together in Biz A, set the Account as 'unknown soldier'. Then when the £1000 comes in to Biz A from Biz B, attribute that to the "unknown soldier" account.

Does that sound about right?

 

Cheers,



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abacus12345


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Hi, Are these businesses limited companies?

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samsonite


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Hi. Thanks for responding :) Yes they are ltd companies.

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abacus12345


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So Biz A provided B with a loan? B will now pay back the money?

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samsonite


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I guess so. So each payment from Biz A to, for example, Amazon on behalf of Biz B should be credited to a Current Liabilities Account in Biz A's books?

It's just a bit confusing because if Biz B then claims for the Amazon stationary - it'll need the Amazon receipts to back it up. Do I just do a long journal entry in Biz B's books explaining what each transaction is, totalling it out at the £1000 and then transfer all the receipts to Biz B?

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abacus12345


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From what I can gather, invoices are not in the name of biz B? I fear you may have missed a trick here.

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A man who can read, yet doesn't, is in no way wiser than a man who can't.

 
samsonite


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Nope. It was all done as if they were Biz A purchases :/

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abacus12345


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Is it possible to get the invoices reissued? A could sell to B, that's not without its downsides. Your website could be capital expenditure also as an oppose to revenue expenditure. I definitely advise an accountant :) you'll save yourself these headaches

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Cheshire


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Just to complicate matters further, potentially - are either of the companies VAT registered?



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Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
samsonite


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No, thankfully neither are vat registered. Getting invoices reissued will be tricky, and probably only possible for around 40% of them.

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