Accounting for New Business
An entrepreneur plans to establish a new company in 2020, but previously purchased approximately 3,000 items of inventory worth about $50,000 as an individual, with some lacking receipts. The core issue is: how can the unclaimed inventory cost be legally transferred to the company, and how can the company's repayment of the individual's advance be structured to avoid taxation. Based on available information, this article analyzes possible accounting treatment paths and tax risks, emphasizing the need to consult professional advisors.
Hi All, I will be starting a new business in 2020. My problem is that over the years I have procured inventory to be sold as an individual and not all have receipts/records. When I start the new business it will start with (making up numbers) 3000 items worth of ~$50,000 all purchased with personal cash. What I am not able to understand is that since as individual I have not showed this as cost of goods, how will I transfer this cost to the new company and when that company pays the dept back to me this will not be taxed. me= -$50,000 (not sure how to show this) Company = 3000 items and -$50,000 dept When paid back from company to myself me +$50,000 (how will this be not taxed as income is the ultimate question) Company= -$50,000 and whatever other profits Hope my question is clear. Thank you!