Starting an LLC: Where to begin?
in Business, Accounting & Taxes ·
Jack Young said:Honestly, just give your LLC interest-free loans... calculating and paying out interest is going to cost you a fortune in taxes. It's better to skip that headache entirely.
I'm actually interested in the ones with interest.
What do you mean by the interest being "too expensive"?
Can you walk me through that?
Here’s my logic: I lend money to my own company, say $33, at a 10% annual interest rate. That means the company pays me $3.25 a year in interest. Since that's an expense for them, it lowers the company's taxable profit, so they pay less corporate tax. Then, as an individual, those $3.25 aren't counted as taxable income for me. Basically, I pulled $3.25 out of the business without paying corporate tax or personal income tax.
Is there a catch? Where's the sting?

