Investment Query

[nasir_skp]

Hi

I have a question regarding investment evidence.

If funds have been transferred from personal account to Business account , say 50k through director loan and company has generated revenue for three say 60k and expenses say 50k.

Details

Ist year

Revenue: 12k
Expenses: 10k
Net profit: 2k

2nd year

Revenue: 20k
Expenses: 15k
Net profit: 5k

3rd year

Revenue: 28k
Expenses: 25k
Net profit: 3k

It means company has made 10k net profit for three years.

My questions are

1. Would HO consider 50k investment in this case?
2. Company's balance sheet would be showing current assets like cash in bank = 50k . Does it sound good as it's showing more liquid assets.
3. Would HO consider why Director loan was given to the company if company could have generated revenue and cover expenses itself?

Please advise. Thanks in advance

[zimba]

1. Would HO consider 50k investment in this case?

Invested does NOT mean spent. HO set out clear guidance on what counts as invested and what you need to send as evidence

2. Company's balance sheet would be showing current assets like cash in bank = 50k . Does it sound good as it's showing more liquid assets.

The company accounts should show that the company is in debt to its director's (50K in this case) This shows up in the creditors section of the accounts

3. Would HO consider why Director loan was given to the company if company could have generated revenue and cover expenses itself?

No, HO does not care that the revenue covered the expenses. You simply need to show that you injected cash to the company and the company was active

[Yasm33n]

1. Would HO consider 50k investment in this case?

Invested does NOT mean spent. HO set out clear guidance on what counts as invested and what you need to send as evidence

2. Company's balance sheet would be showing current assets like cash in bank = 50k . Does it sound good as it's showing more liquid assets.

The company accounts should show that the company is in debt to its director's (50K in this case) This shows up in the creditors section of the accounts

3. Would HO consider why Director loan was given to the company if company could have generated revenue and cover expenses itself?

No, HO does not care that the revenue covered the expenses. You simply need to show that you injected cash to the company and the company was active

Hi zimba
Wages to employees ( not director wages ) is it expence or investment .

[zimba]

Acceptable expenses that can come from your investment

[nasir_skp]

Thanks Zimba88 for your valuable feedback. Much Appreciated.

1. Would HO consider 50k investment in this case?

Invested does NOT mean spent. HO set out clear guidance on what counts as invested and what you need to send as evidence

It means once money has transferred from Personal account to Business account, it will be considered as investment. it does not matter whether funds have been used or still sitting in the company's account. Right?
Also I have read guidelines page 20 where spent or invested words are mentioned but could not understand if money available in business account would be considered as investment?

2. Company's balance sheet would be showing current assets like cash in bank = 50k . Does it sound good as it's showing more liquid assets.

The company accounts should show that the company is in debt to its director's (50K in this case) This shows up in the creditors section of the accounts

Yes you are right, company should show 50k on the liabilities side of the balance sheet but at the same time current assets (Cash in Hand) are 50k as well with no Fixed/Tangible assets. My accountant suggested it does not show good picture of the balance sheet to have this much cash in hand available with no fixed assets.Does it make sens?

Please advise.
Thanks in advance.

[zimba]

It means once money has transferred from Personal account to Business account, it will be considered as investment. it does not matter whether funds have been used or still sitting in the company's account. Right? Also I have read guidelines page 20 where spent or invested words are mentioned but could not understand if money available in business account would be considered as investment?

Cash can sit there as long as your company was actively trading, paying its expenses and your business is genuine. There is no requirement to spend.
I guess spending 50K should be easy unless you have high turn over

Yes you are right, company should show 50k on the liabilities side of the balance sheet but at the same time current assets (Cash in Hand) are 50k as well with no Fixed/Tangible assets. My accountant suggested it does not show good picture of the balance sheet to have this much cash in hand available with no fixed assets.Does it make sens?

Well HO is not quite bothered to be honest. You are technically doing this as a visa requirement not as a good business practice I guess