Capital introduced

If you're a business owner and want to invest your personal money, stock or assets into your business, you must record these in Accounting. You can easily record the capital you introduce using journals.

To help you record the investment, a default capital introduced nominal ledger account of 3200 already exists. If your company is a partnership, to keep track of which partner has invested into the business, you should create a new nominal ledger account for each partner. When you create the account, you need to make sure you choose the Equity category. You can enter any code you want, but you may want to keep it in the range of 3000 to 3999 along with your other equity codes.

When you record the journal, you enter the capital introduced as a credit and post the opposite debit entry to the nominal ledger account you want to affect.

To record capital introduced.

  1. Go to Journals and click New Journal.
  2. Enter the reference, date and a description if you want to.
  3. Enter the information required to record the capital introduced and click Save.

For example, to record money invested, enter the following information:

Ledger Account Details Debit Credit Include on VAT Return?
Current (1200) Capital introduced Amount invested 0.00 Leave clear
Capital introduced (3200) Capital introduced 0.00 Amount invested Leave clear

To record stock or assets, enter the following information:

Ledger Account Details Debit Credit Include on VAT Return?
Asset or stock account Capital introduced Value of the asset or stock 0.00 Leave clear
Capital introduced (3200) Capital introduced 0.00 Value of the asset or stock Leave clear

If you're VAT registered and you paid VAT on the original purchase of the asset, you may be able to reclaim the VAT on this. If you're not sure if you can reclaim the VAT, you should contact your local tax office. If you can reclaim VAT, when you record the journal, you should show the VAT element separately. For example, if you introduced a van to the business, post the following journal:

Ledger Account* Details Debit Credit Include on VAT Return?
Capital introduced (3200) Capital introduced 0.00 Gross value of the van Leave clear
Motor Vehicles – Cost (0050) Capital introduced Net value of the van 0.00 Select this check box
VAT on Purchases (2201) Capital introduced VAT amount 0.00 Select this check box