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Old 09-08-2010, 11:46 AM
xsys2001 xsys2001 is offline
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Adding to 'owners equity' in new S Corp.

This question is probably more of a 'general accounting' question, but going to ask anyways since i'm not sure which direction to go.

Am using QB 2010 and have a newly developed S Corp. Haven't started generating any revenue as of yet, but in the process of getting things put together i am trying to figure out how to keep track of what I'm putting into the business.

So far I've added an Owners Equity account that i names 'Capital'.

Questions:

1) I'm adding some expenses to the business for supplies and equipment. Can i give the business a 'loan' by depositing personal funds into the 'Capital' account?

2) If yes to (1), can i do this as much as needed until revenue ramps up?

3) How do i fill out the checks that I'm depositing so that they can be accurate and accountable?

and

4) how long can i keep the loans in the capital account before i need to repay myself? and does interest need to be repaid?


Thanks!
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  #2  
Old 09-08-2010, 11:50 PM
qbqcca qbqcca is offline
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Location: Montreal, Canada
Posts: 814
Quote:
Originally Posted by xsys2001 View Post
This question is probably more of a 'general accounting' question, but going to ask anyways since i'm not sure which direction to go.

Am using QB 2010 and have a newly developed S Corp. Haven't started generating any revenue as of yet, but in the process of getting things put together i am trying to figure out how to keep track of what I'm putting into the business.

So far I've added an Owners Equity account that i names 'Capital'.

Questions:

1) I'm adding some expenses to the business for supplies and equipment. Can i give the business a 'loan' by depositing personal funds into the 'Capital' account?

2) If yes to (1), can i do this as much as needed until revenue ramps up?

3) How do i fill out the checks that I'm depositing so that they can be accurate and accountable?

and

4) how long can i keep the loans in the capital account before i need to repay myself? and does interest need to be repaid?


Thanks!
1) Yes
2) Yes
3) I would put on the memo line "Directors Loan"
4) The answer to this question can be only properly answered by some one who knows the tax laws in the jurisdiction in which you operate. I would suggest you consult with your CPA or if you don't have one, maybe the person who prepares your personal taxes, or maybe you have an acquaintance who works in accounting. Failing all the above, a phone call to your local Tax Authority might be in order.

Hope this Helps
Warren
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  #3  
Old 09-09-2010, 02:33 AM
Joe Williams Joe Williams is offline
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Posts: 8,847
If you are just loaning the money to the3 corp. put it in an Other Current Liability account named "Loan from (your name), and then deposit it using that account.
To repay it just enter a check suing the same liability account.
Yes, the corp needs to pay interest on the loan. The interest needs to at least an amount that shows IRS that it is not just a gift. The rate can be below the current rate of the bank loans, think the Prime Rate.
As ALWAYS, have a CPA to verify the books and do the tax filing!!
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