Lenders try to assess whether youll continue to make the same, or more, income into the future.
Regardless of how you earn a living, theres more to income-qualifying than numbers. You should consult an experienced accountant to properly account this loan in your records. Recording a loan in your books uses several financial accounts to record the loan, including cash, loan receivable and interest revenue. It is crucial that both parties sign the note to make it enforceable. Some terms that should be included are names and addresses of the borrower and lender, amount of the loan, collateral, interest rate, and repayment structure. This formalizes the loan, making it a legal record and ensures repayment later on. A promissory note is a written promise to pay someone under the specified terms. Once you work through that issue, it is key to have some agreement between the two LLCs, such as a promissory note. If this issue is not addressed in your operating agreement, the default provision can be found in the Florida Revised Limited Liability Company Act. If there are multiple members in each LLC, you would have to look at your operating agreements to determine the procedures regarding lending and borrowing money, as the transaction may require a majority vote or consensus of all members. The ideal scenario is that both LLCs are single-member entities, making lending and borrowing transactions more simple. The answers to these questions depend on a few factors. If your accountant messes it up the IRS still sends you the bill, not the accountant.ĭon’t Miss: Can You Pay Off Your Car Loan Early Can My Llc Lend Money To Another Llc You need to have a fundamental understanding of basis if you are business owner. Basis is one of those animals many accountants screw up on or fail to track accurately. Before your eyes roll back in your head, hear me out. The other major issue with S corporations is basis.
The wage issue is easy to handle I require S corporation clients to do their payroll in my office. There are a few rules that need to be followed, like the owners paying themselves a reasonable wage. Most small businesses in my office use the S corporation structure. As with all good things, there are pitfalls. Self-employment taxes disappear with the corporate structure and with an S corporation there is no income tax either as all profit flows to the owners. The tax advantages of organizing as an S corporation or an LLC electing to be treated as an S corporation are significant.