"Mauibob" <mauibob[at]aol.com> wrote:

- quote -

Why is a start up loan necessary from the business owner
directly? Your corporation should have been properly
capitalized. If it was not properly capitalized and you are
using a loan instead of contributing capital you could find
yourself facing a "thinly capitalized corporation" issue on
audit.

In my experience, over the last 20+ years, as a professional
accountant, I've found that companies that show capital of
$100 and loans from stockholders have difficulty getting
credit extended to the company. Instead, vendors and
creditors want personal guarantees from the owners. This is
frequently done because the vendors/creditors can see what
the business owners have done and they have concerns about
the businesses ability to operate.

I would advise you to do two things:

1 - find a qualified accountant with pass through entity
taxation experience and discuss your situation with them in
detail. Yes, this will cost you a few dollars, but it will
be well worth it.

2 - Adequately capitalize your business or don't open it.

Gene E. Utterback, EA

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"Mauibob" <mauibob[at]aol.com> wrote:

- quote -

These kinds of things should have been decided upon before
the loan was made-not afterwards as a second thought.

Wayne Brasch, CPA, M. S. Taxation

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What is customary for a business loan from the biz owner to
the S-corp in regards to length of loan and %.

Suppose it is a $10k loan. Can I write up a loan with terms
of 60 months at 2.5%? Any comments ? Thanks in advance.

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