Forums: Discussions for entrepreneurs and small business.

I have a question that I have been trying ot get the answer to on several other websites with no luck.

I just recently started my business and I incorporated my business mainly to protect my personal assests from my business assests. Well, because I work full-time I knew going in that I had every intention of funding the start-up costs for my business myself. My question is simple the money I use to invest in my business is that deductible in anyway. I want to deposit money monthly in my business bank account from my paycheck. What are the tax implications for doing things this way if any at all.

Thanks in advance for any reply

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Shantel L. Collins
Gabriel’s Romance
Discount designer fragrances at prices you`ll love
http://www.gabrielsromance.com

Since you are a corporation, you will be able to deduct the expenses you pay out of pocket if your company does not reimburse you on your individual tax return. 

Hope this helps.

Bree

You might want to read for individual tax deductibles is the following link

http://www.irs.gov/pub/irs-pdf/p17.pdf

The personal $$ you put into your S Corporation can be considered additional paid in capital or equity. Journal Entry: Debit - Cash, Credit - Shareholder Equity (I am assuming that you filed with the IRS for the "S Election".) However, you can also "loan" money to your S Corporation with the expectations that the corporation will one day pay you back. You would have to set up an official note on the books for this loan - a "Shareholder Loan Payable." Journal Entry: Debit - Cash, Credit -Shareholder Loan Payable. Also the corporation would have to pay you interest on the $$ you loan to it.

1. Record Money going in.

2. Record expenses paid out of corporate books.

You could then expense any relevant business expense that you pay for out of this business account.

Hope this clarification is useful!

 

Start up expenses are deductible on your corporate tax return.  I wrote an article about this on my blog last year.  You can read it here:
Deduct New Business Costs

http://glgcpa.blogspot.com/2006/10/deduct-new-business-costs .html

If you have any additional questions, please ask.



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Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com

Wow!!! I can`t thank you all enough for all the advice you have offered me here. Its hard enough to start a business but starting it on your own makes it double the effort. I did some reading on Paid in Equity to get  a better understanding of how it works.

I had long since decided against seeking out financial loans for my business starting out, because my personal credit is not that great and I know that with a new business the owner`s personal credit usually becomes liable with applying for financing.

Anyway thanks again ladies. I hope that I offer assistance to each of you some time in the near future. 

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Shantel L. Collins
Gabriel’s Romance
Discount designer fragrances at prices you`ll love
http://www.gabrielsromance.com