CCPC Investment

by Denise
(Ottawa, ON, Canada)

I recently opened a corporation in Canada. I use it primarily as a holding company.

I used $50,000 of my own money to give to another business so that my corporation would own 10%. The money went from my personal account to the guy I bought shares from. How in the world do I record this in QB2011?

This is what I did, am I right?

clearing account (asset or liability???) debited 50,000
owner's investment (equity account) credited 50,000

then

shares of the business (asset) debited 50,000
clearing account (asset or liability???) credited 50,000



image of fancy scroll lines



Hmmm Denise,

I think you have problem and need to speak with an accountant or lawyer.

From my point of view, because you provided your own personal money to purchase the shares ... and not the corporation's money ... I want to ask "Does the corporation own the shares?"

This is not something I would know how to handle. A corporation has it's own separate identity.

This is what I think should have happened:

You invest $50,000 in your corporation:

Dr Cash in Bank
Cr Shareholder's Loan

The corporation invests in a business:

Dr Investment in (insert name here)
Cr Cash in Bank

But if I understand what you've said, the $50,000 came from you personally and not the corporation ... meaning the transaction never went through the corporation.

As I mentioned above, it's probably best to check with your accountant or lawyer on the legalities of the transaction.









P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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