The Income Tax Act contains a series of rules that may have income tax consequences for the person receiving the loan from the company
When the owner or owners, also called members, invest personal funds in the LLC, the infusion of cash constitutes equity or debt that the LLC must repay. Paying Your Mortgage With PayPal. Q: I own a limited liability company (LLC) that holds some rental properties free and clear. If you are joining a partnership, a capital contribution is usually required. This rate should at approximate the interest rate the LLC pays to its own creditors. The payment of Corporation Tax can be recovered when you repay the loan back to the company. Ask yourself what you can do and get for free. When you borrow against your house, you’ll get a competitive interest rate by applying with multiple home equity loan lenders.
Penney used this method – when no banker would lend them a dime. If you’re earning a $1,000 salary from your LLC that files a corporation, and an additional $90,000 as dividends, you’ll pique the IRS’ interest. Not only can this cause your nonprofit to incur fines and penalties, but it could also cause unwanted scrutiny. However, you are limited in the amount of funds you can borrow.