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If I start a company, become its director, and put in £100, what account should that be filed under?

I imagine the account should be an income type account. But I do not know what to call it. It's not a loan, as the company has no obligation to pay me back.

Presumably, the £100 debits the current account (asset type account).

Apologies if this is trivial, but as I have no experience in accounting, I'm not sure what common practice nor common terminology should be.

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Since you're not loaning the company the money, the correct category is Equity. It's not an income type account, rather it represents the balance of Assets - Liabilities = Owner's Equity

So you'd put down £100 as the starting balance of Owner's Equity, and then a Cash Balance of £100 in a cash account.

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  • I did not realise you could have an equity account. I assume then there can only be one equity account(?). Also, is this how a share purchase would be represented? It seems that they would be similar.
    – cammil
    Feb 2 '15 at 21:31
  • There could be several equity accounts, (if there are different levels of shares etc., and if you wanted to track initial capitalization versus gains to equity from the business).. yes, share purchases would be the same, increase in equity (credit), increase in cash (debit). Feb 2 '15 at 21:33

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