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Aug 31, 2012, 06:04 #1
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- Jan 2012
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How to use personal saving as a private loan for my business?
I have the following situation and could somebody with relevant experience please advise?
I live in U.S., and have my own c-corporation. I'd like to buy a website for $20,000 but my business does not have enough funding in its checking account. I do not want to get a small business loan using my c-corp identity because it'll go through a lot of formality, documentation, etc.. it's a painful process. I want to keep it simple and well under control.
I have enough personal saving, so I can just buy the website using my personal saving. But for tax reasons, I do not want to personally buy website and have my c-corp to run it because money used to buy the website was personal and can not be used to deduct profit made by the business. in another word, when my business file tax returns, it cannot claim $20,000 as business expense. and when I file my personal tax return, I cannot claim $20,000 as personal loss either. This is a very bad situation and I want to avoid it.
So here comes my theory: how about my c-corp takes a private loan from myself with a reasonable interest rate, say 4% or whatever suitable. Every month, my c-corps pays back the loan to myself until $20,000 + interest are paid off. This way, when my c-corp files tax return, $20,000 is a business expense, and when I file my personal expense $20,000 is there, nothing changed for personal tax return.
is there any other way to handle this? I'd like to keep it simple, legal and less hassle free. if there are better suggestions, please let me know.