CC Registration and Close Corporation Information

Accounting Requirements of a Close Corporation (CC)

A CC has similar accounting requirements to a sole trader or partnership when compared to the daily transactions such as sales, cost of sales etc. 

The difference between a CC and sole trader, partnership or other forms of business ownership is the accounts concerning CC members.

 Examples of the CC accounts are: payments to members, contributions by members and other transactions regarding members of the CC.

The Close Corporations Act sets rules that prescribe the minimum accounting records that must be kept by close corporations.

Accounting Records of Close Corporations (CC)

Close Corporations are required to keep accounting records that will enable them to:
  • Present the state of affairs of the business in a fair manner
  • Explain the transactions (for the financial year) and financial position of the CC. (Usually on the Balance sheet date)
The following accounting records must be kept:
  1. Records showing all assets and liabilities
  2. Records showing members contributions, retained income (undrawn profits) and revaluations of fixed assets (being members funds of the CC)
  3. Records showing loans to and from members
  4. Records containing entries from day to day transactions, all cash received and paid out (Cash Receipts Journal and Cash Payments Journal)
  5. Records of all goods purchased and sold on credit and services rendered on credit
  6. A fixed asset register
  7. Statements of annual stocktaking showing both the number of items and the value of the stock on the balance sheet date
  8. Vouchers supporting all entries in the accounting records
  9. The accounting records relating to:
  • Contributions of members
  • Loans to and from members
  • Payments to members, e.g. salaries, distributions, interest payments) records must contain sufficient detail of individual transactions to enable the nature and purpose of the transactions to be identified.
The accounting records of the Close Corporation must be kept in a safe, secure place of the business or the registered office. The accounting records must be open at all reasonable times for inspection by a member. An Accounting Officer of the CC will usually assist with the financial statements. The accounting records of a Close Corporation (CC) must be controlled properly and effectively to ensure accurate information is recorded, an accounting officer can assist in complying with the accounting requirements of the CC.

 © Copyright 2009  ¦  All Rights Reserved  ¦
Do not copy content from this page. Plagiarism will be detected by Copyscape.