Profit/Loss Template for Limited Company

[MBSynergy]

Hi guys,

Just made the transition to limited company status for tax reasons and trying to collate as much information as possible about the processes etc before I meet up with an accountant.

Just wondering if anyone who currently trades domain names under a limited company could share their Profit/Loss account template? (Assuming that you treat domain renewals and purchases as costs/expenses and your sales as taxable income.

Cheers,

 

[martin-s]

Purchases should probably be in the accounts as assets if the purchase prices is £100+. Otherwise, yes, just an expense.

 

[MBSynergy]

Thanks Martin. Ok, so basically renewals and handregs could be classified as expenses but significant purchases should be categorised as assets? I've read about different ways of classifying them so its good to be armed with as much info as possible before I meet the accountant.

One of the initial major purchases my limited company will make is to buy my "self-employed domain portfolio" for £10,000 (so I can claim it as tax free Capital gains instead of adding it to my taxable income in my end of year self-assessment). Since my portfolio stands at around 700-800 names this would make the average purchase price per domain around £15. How would you personally classify this purchase then? Expenses or assets?

 

[martin-s]

That's probably a single asset. However, you'll have to be careful that it's valued at a fair market price, as being bought and sold by "connected" parties.

As the limited company is new, you might be able to pass the value into it in other ways. Cash account expenses, etc. Depending on how far back the portfolio goes.

 

[cav]

Purchases should probably be in the accounts as assets if the purchase prices is £100+. Otherwise, yes, just an expense.

I thought if your principal trade activity is the buying and selling of domain names then any domain name purchase (irrespective of cost) is treated as a stock item rather than a fixed asset. i.e. any domain name purchase and its related sale is treated as a profit & loss item (and subject to trading profit for tax rather than a capital gain) Is this not correct then?

Perhaps if you are rent/lease them out then it would be a fixed asset rather than trading stock and subject to the capital gains tax rules on sale.

 

[MBSynergy]

Thanks again Martin. I hadn't thought of the implications of selling at fair market price, just assumed I had the right as a self-employed individual to sell the portfolio for whatever I wanted. I might just simply gift/transfer the portfolio instead as I have certainly spent more than £10,000 GBP over the last 5 years I've been building it. Will speak to the accountant about this though.

@cav I was under the same impression and that is the route I had planned to take. Good to hear something different from Martin though as it's an extra thing to pose to the accountant...