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Karoco
Level 1

Shareholders Contribution

As the owner of a small construction company, I contributed 30,000 from the sale of our home to pay off business debt. I originally recorded this in the shareholders contribution account. I am building a home for my personal use and was wondering if I could be reimbursed by having the business pay for materials and some labor. My question is should I leave this money in the contributions and when it is paid out record it as a distribution? Or should I Make a contract with the company and use this money as job income as we would with any other job. Which Is the best way to go about doing this and would look the best in our books? 

1 Comment 1
Rustler
Level 15

Shareholders Contribution

First thing is to get with a tax accountant to find out how to use the shareholder accounts. This assumes you are taxed as an s-corp since you mention shareholder accounts.

 

S-corp shareholder account are not used the same as sole proprietor or partnership equity account at all.

 

You loan money to the company, the company uses it and then pays you back.

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