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Guide: Recording Your Initial Capital Injection

Overview

This guide explains how to record the initial money you invest into your company to start operations. In accounting terms, this establishes your Opening Balance and records your Owner's Equity.

Scenario: You have deposited 50,000,000 IQD into your corporate bank account as starting capital.

Prerequisites

Before you begin, ensure the following are set up:

  1. Company: Your company details are verified in Settings > Companies.
  2. Chart of Accounts:
    • Equity Account: Ensure you have an account for Share Capital (e.g., 310101) or Owner's Equity.
    • Bank Account: Ensure you have an account for your Bank (e.g., 110102 Bank Account (IQD)).

Step 1: Create a Journal Entry

Since this is a capital injection and not a sale or purchase, you will use a manual Journal Entry.

  1. Navigate to Accounting > Journal Entries in the sidebar.
  2. Click the + Create button.

Step 2: Fill in the Header Information

Complete the general information for this transaction:

  • Journal: Select "Opening Balance". (If unavailable, use "Miscellaneous Operations").
  • Currency: Select the currency of the deposit (e.g., Iraqi Dinar (IQD)).
  • Entry Date: Select the date the money was deposited.
  • Reference: Enter a clear description, e.g., Initial Capital - Hazhin Designs.

Step 3: Add the Transaction Lines

You need to record two lines to balance the transaction: one for the money coming in, and one for who owns it (you).

Line 1: The Deposit (Debit)

This records the money entering your bank account.

  • Account: Select your Bank Account (e.g., 110102 Bank Account (IQD)).
  • Debit: Enter the amount (e.g., 50,000,000).
  • Credit: Leave as 0.
  • Description: "Initial Bank Deposit".

Line 2: The Equity (Credit)

This records your claim on the company's assets.

  • Account: Select your Equity Account (e.g., 310101 Share Capital).
  • Debit: Leave as 0.
  • Credit: Enter the same amount (e.g., 50,000,000).
  • Description: "Owner Share Allocation".

Verification: Check the totals at the bottom. Total Debit must equal Total Credit.

Click Create to save and post the entry.

Step 4: Verify the Result

To ensure the transaction was recorded correctly:

  1. Go to your Dashboard. The corresponding Bank card should now reflect the deposited balance.
  2. Navigate to Accounting > Reporting > Balance Sheet.
    • Verify that Assets shows your bank balance.
    • Verify that Equity shows your Share Capital.

Your company is now funded!