Hi there, I recently incorporated and I want to separate my personal finances from the company. To do that, I want to loan my own money to the company (I know buying stocks is also an option but I am avoiding it as it deemed more complicated to me at this point; feel free to object). How much interest should I charge the company? Is there any blog post or any resource that you can share? I have already done some research and I am aware of the Applicable Federal Rates. I just don't know which number to use and I also hope to find some boilerplate documents.
(of course I am not seeking legal advice and all readers including me should take all the responsibilities of all the actions they take)
Loans must be interest-bearing. This makes your life as an entrepreneur more complex. Your tax return and the corporate tax return will cost more to prepare.
Optimize for simplicity in legal structure, bookkeeping, and tax return preparation.
(1) Why corporation?
(2) Why C corporation?
(3) Unless you’re injecting multiple millions of your own money into your new venture, whatever perceived tax benefit you can imagine will be dwarfed by the overhead and cognitive opportunity cost of getting clever.
(4) If you add investors, the first thing they’ll want to do is clear all the bullshit off your balance sheet. Why add it in the first place?
Just contribute capital, unless you can think of a damn good reason to do otherwise.
You need real tax advice. Go get some.