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Thread: Funding company with my own capital

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    Funding company with my own capital

    Sorry for the very rookie question.

    I went through the process and registered myself a new company it is pty ltd with myself as the director and incorporator the company it was automatically registered for tax.
    Now I opened a business banking account and want to deposit capital into the account so that I can start to buy equipment for the company in order to later claim back the vat etc.

    The funds I want to deposit is from my own personal money and what I am uncertain about is how do I go about this without attracting unnecessary tax as I have zero accounting skills.
    Can I simply just deposit the money into the business account and specify it as capital when I need to do my tax return? Is there any accounting software I can use to help in this regard?

    Any guidance to send me in the right direction?

  2. #2
    Diamond Member Mike C's Avatar
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    You need to see yourself and your company as separate entities each with their own obligation to submit tax returns and pay the necessary tax.

    You have presumably already paid tax on the money that you are going to put into the company. So, in effect, you will be making a loan to the company.

    The company then is in debt to you for that amount. When the company starts making a profit it can then pay you back your loan.

    Because you say that you have no accounting skills I would suggest that you get someone to help you to keep a strict account of your business transactions right from the start as it can get out of hand very quickly.



    As an aside ... just because your company is registered for tax does not mean that it has been registered as a VAT vendor.

    Who should register for VAT?

    Any person that carries on a business may register for VAT. You can register once for all different tax types using the client information system. The term person is not only limited to companies but also includes, amongst others, individuals, partnerships, trust funds, foreign donor funded projects and municipalities. In order to register, an application form must be completed and a specific process must be followed.

    It is mandatory for a person to register for VAT if the taxable supplies made or to be made is, in excess of R1 million in any consecutive twelve month period.

    A person may also choose to register voluntarily if the taxable supplies made, in the past period of twelve months, exceeded R50 000. As from the 1st of March 2012, qualifying micro businesses that are registered for Turnover Tax may also choose to register for VAT provided that all the conditions for voluntarily registration for VAT are met.

    A person who is obliged to register for VAT is referred to as a vendor.
    People will forget what you said, people will forget what you did, but people will never forget how you made them feel. - Maya Angelou

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    Dave A (13-Oct-18)

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    Hi Mike,

    Thank you for the solid info!

    Regards

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