I set up a ltd company with 2 friends and am now in the process of filing accounts. This is the second year's accounts, we had the first year's accounts done by an accountant (at great cost) but this second year should be so simple that we want to file ourselves. The company has never had any revenue so after this year's accounts are filed (year ending March 1 2004) we plan to disolve the company.
I have a few questions that I hope some kind accountant can advise me on.
In the first year of trading each director (there are 3 of us) made loans to the company of 300 in cash (which formed the opening balance for the company bank account) and about 2,000 each in purchases that we made on behalf of the company (all totally legit stuff like buying the domain names, having stationary designed and printed, etc. There are absolutely no tax dodges where we tried to hide personal expenditure). The first year accounts show the director's loans as liabilities on the balance sheet and broken out under "Creditors - amounts due within one year".
In the second year (the accounts I now need to file) there has been no activity whatsoever with the company except:
1) The bank balance went down by about 50 because of bank charges.
2) We balanced up the directors loans because 2 of us had made all the payments on behalf of the company and the third had made none. The third guy wrote a cheque to the company and the other 2 of us withdrew the money he deposited such that each of us had equal loans to the company. The total loan amount from all 3 of us added together was unchanged.
I assume that the balance sheet for the next set of accounts will be identical to the last, except that it is 50 odd quid weaker because of the bank charges deducted. Do all director's loans still show as due within one year even though we never called for them to be repayed last year? When we come to wind up the company it will have no way to repay the loans, what do we do about this? Do each of us write a formal letter to the company writing off the loan so that it can then be wound up with zero debts?
Finally, as far as the profit and loss is concerned, is each year self- contained, i.e. do I just show this year as zero revenue, 50 operating expenses, and a loss of 50, or do I need to carry forward the loss from the first year so that my bottom line this year is the accumulated loss from the first and second year of "trading"?
Thanks for any answers anyone can give. I hope it's clear why with this so simple we really don't want to pay a few hundred quid to get these accounts done, especially when all we've done is lost money on this thing.
- Julian