Capital Contributions¶
Last reviewed: 2026-03-31 · Nnamdi
Status: Complete
Route: /capital → /capital/new
1. What is it?¶
Capital Contributions tracks equity investments made by owners and shareholders into the business. When an owner puts money into the business — not as a loan, but as a permanent investment — that is a capital contribution. It increases the owner's equity stake and appears in the Equity section of the Balance Sheet. Unlike loans, capital contributions have no repayment obligation.
2. How does it work in Finora?¶
2.1 The capital contributions list (/capital)¶
Header action: - Record Contribution — opens the new capital contribution form
KPI summary cards (visible on the list page): - Four KPI cards are present (values empty in test business with no contributions recorded)
Search and filter: - Search bar: by contribution number, contributor, or description - Show voided checkbox — toggles visibility of voided contributions
Empty state: "No capital contributions found — Record your first capital contribution to get started."
2.2 Recording a capital contribution¶
Click Record Contribution (navigates to /capital/new). A form appears:
What is a Capital Contribution?
"A capital contribution is when an owner or shareholder invests money or assets into the business. This increases the business's equity (owner's stake) and is not a loan — there is no repayment obligation."
| Field | Required | Notes |
|---|---|---|
| Date | Yes | Defaults to today |
| Amount | Yes | The value of the contribution in naira |
| Contribution Type | Yes | Cash / Bank Transfer (default) / Asset Contribution |
| Deposit To | Yes | The asset account receiving the funds. Defaults to "1010 - Cash on Hand". Options include all asset accounts (1000 Assets, 1010 Cash on Hand, 1015 Petty Cash Advance, 1020 Cash at Bank - Operating Account, and other asset accounts from the COA) |
| Contributor Name | Yes | The owner or shareholder making the contribution (e.g., "John Smith (Owner)") |
| Description | Yes | Brief description of the contribution (e.g., "Initial capital investment", "Additional investment for expansion") |
| Reference | No | Optional bank transfer reference number or other identifier |
Action buttons: - Cancel — returns to the capital contributions list - Record Contribution — posts the contribution to the GL
2.3 GL entries¶
On recording a capital contribution (cash/bank transfer): | Account | Debit | Credit | |---------|-------|--------| | 1020 Cash at Bank (or whichever account selected in "Deposit To") | Contribution amount | — | | 3025 Owner's Capital Contribution (Equity) | — | Contribution amount |
The cash inflow increases the selected bank/cash account. The credit goes to the equity account — increasing the owner's stake in the business.
Asset contribution (non-cash): | Account | Debit | Credit | |---------|-------|--------| | 1xxx / 1xxx Fixed Asset Account (value of asset contributed) | Asset value | — | | 3025 Owner's Capital Contribution | — | Asset value |
For asset contributions (e.g., an owner contributing a vehicle), the Deposit To field should point to the relevant asset account. The equity side is still credited to 3025.
3. Business rules & constraints¶
| Rule | Detail |
|---|---|
| Capital contributions are equity, not debt | They do not create a repayment obligation — the owner does not expect to be paid back |
| Contribution Type: Asset | Use this when an owner contributes a physical asset (equipment, vehicle, property) rather than cash |
| Deposit To = Debit account | The "Deposit To" field selects which asset account is debited — the corresponding credit always goes to the owner's equity account |
| Voiding is supported | Contributions can be voided — use the "Show voided" toggle to see them |
| Capital ≠ Loans | Money that will be repaid must be recorded under Loans (/loans), not Capital |
4. Nigerian regulatory context¶
Equity vs Loan — CAC and CAMA - Under CAMA (Companies and Allied Matters Act), paid-up share capital is distinct from shareholders' loans - The equity section of the Balance Sheet should reflect actual paid-up capital — not shareholder loans dressed as equity - For incorporated businesses, each equity injection should correspond to a board resolution authorising the allotment of shares, or documented as a retained earnings contribution
Capital Contributions and CIT - Equity contributions from owners are not taxable income to the business — they are capital receipts - The business does not pay CIT on money invested by its owners - However, if the business pays dividends on equity, withholding tax applies (see Shareholding & Dividends)
Thin Capitalisation Context - The ratio of owner debt (loans) to equity is monitored by FIRS for thin cap purposes - Properly recording owner equity contributions (in Capital) vs owner loans (in Loans) keeps this ratio accurate and supports CIT deductions on interest
Start-up Capital - New businesses often fund initial operations entirely from owner capital contributions - Recording these accurately ensures the Balance Sheet opening position is correct and that early expenses are not misclassified as liabilities
5. Common customer questions¶
Q: "I put ₦5 million into the business account. Is that income or a loan?"
Neither — it's a Capital Contribution. You're investing in your own business, not lending to it (unless you expect repayment, in which case record it as a Loan in
/loans). Record it under Capital; it will appear as equity on your Balance Sheet and does not affect your P&L.
Q: "What's the difference between Capital and Loans in Finora?"
Capital is money you invest permanently — you're not expecting repayment. Loans are money the business borrows and must pay back. Use Capital (
/capital) for equity injections; use Loans (/loans) for money you're lending to the business that you'll want back.
Q: "I contributed equipment, not cash. How do I record it?"
Select Contribution Type: "Asset Contribution" and set Deposit To as the relevant fixed asset account (e.g. a vehicle or equipment account). Enter the fair market value of the asset as the Amount.
Q: "The KPI cards on the Capital page are empty. Is that a bug?"
If no contributions have been recorded yet, the KPI cards will show empty/zero values. This is expected for a new business or one that hasn't entered their capital history yet.
6. Known edge cases¶
Opening capital for existing businesses¶
Businesses that have been operating before joining Finora need to enter their opening capital position. This is typically done as a single capital contribution entry matching the opening equity balance on their previous accounts.
Multiple owners / shareholders¶
If a business has multiple owners, each owner's contribution should be recorded separately (with the Contributor Name field identifying each owner). This maintains a clear audit trail per shareholder.
Asset contributions at fair value¶
When an owner contributes an asset, the amount entered should be the asset's fair market value at the time of contribution, not its original purchase price. If the asset has depreciated, using original cost will overstate equity.
Capital withdrawal / drawings¶
The Capital page covers contributions (equity in). Drawings — money taken out by the owner — are typically recorded against a Drawings account (3050 or similar). Finora's Capital module does not currently show a "Record Drawing" option on this page.
7. Escalation trigger¶
Escalate to Tier 3 (Founder) if: - GL entry on a capital contribution is posting to the wrong accounts - A voided contribution is still appearing in the Balance Sheet equity total - Business needs to record a bulk opening equity position across multiple owners
Escalate to Tier 2 (Support Lead) if: - Business is unsure how to record an asset contribution at fair value - Business wants to record opening capital history from a prior period - Business needs to distinguish share capital from retained earnings in the equity section
8. Last reviewed¶
2026-03-31 — Nnamdi. Verified against production. Capital list confirmed (empty — no contributions in test business). Record Capital Contribution form fully captured: Date, Amount, Contribution Type (Cash / Bank Transfer / Asset Contribution), Deposit To (all COA asset accounts listed — defaults to 1010 Cash on Hand), Contributor Name, Description, Reference. Info panel confirmed: explicitly distinguishes capital from loans. Equity account 3025 (Owner's Capital Contribution) confirmed as the credit account.