Forum Message

Entering start up costs

I have just taken on a new client whose financial year started on 17th April 2014, but in February 2014 he spent some time decorating the premises he rents in order to make it more appropriate for his business. These costs were obviously paid out of his personal account but I need to record them somewhere in the accounts. I have been going round in circles trying to figure out exactly where to record them but I am just confusing myself now. Can anyone please advise?


Posted by Jennifer Webster on Aug 20, 2014 2:31 PM BST

In the "Equity" section of the list of Accounts, create a new account called "Capital Introduced"
Then go to "Transactions" , open a New transaction, In the "Journal " box enter something like "Pre-start painting Feb. 2014". In the date box enter 17 April 2014, "From Account" - Capital Introduced. The "To Account" is the relevant expense account such as Repairs & renewals or "Start up expenses".

This is a notice from the HMRC website:

"Where the qualifying trade was set up and commenced on or after 6 April 1995 the qualifying pre-trading expenditure should be treated as incurred on the day on which the trade, profession or vocation is first carried on. It therefore enters into the calculations of the profit or loss for the first year of assessment in which the trade profession or vocation is first carried on. No separate claim for loss relief is required."

If you are registering for VAT the input VAT incurred on materials in February can be reclaimed.


Posted by Jack on Aug 21, 2014 9:40 AM BST

Thank you Jack, you have just confirmed the process I suspected. It is nice to have the reassurance.


Posted by Jennifer Webster on Aug 22, 2014 8:59 AM BST