Utilizing Shareholder Loans

Shareholder Loans are a powerful tool when you have a private corporation. You may loan your Corporation excess funds that you have and receive it back at anytime tax free. You may also take short term loans out during a fiscal year as long as you pay it back within the year. Another way to use a shareholder loan is to put assets into your corporation. This works similar to selling an asset to the corporation. When an asset is sold to the Corporation, you do not have to take the money right away. In fact the Corporation may need the asset now, but not have the money to purchase it outright. You many sell the asset to the corporation without the corporation paying now, but instead owing you the money later down the road, when it has the money and/or when you need the money. Many people take Shareholder “Draws” out of their Corporation throughout the year and then at the end of the year determine if this shareholder draws are in fact dividends or wages.