How do I document a shareholders loan?

Mutual agreement between partner and company

When applying for a loan you must take into account that the entity to which you go has to evaluate the risk of the operation on the basis of a series of factors. For it they are going to ask you for those documents with which they can verify your previous indebtedness, your solvency, the capacity of return of the borrowed money or the guarantees that you can contribute, among others.

It is important to bear in mind that there are a series of documents that will be used to determine the viability of the operation, so both to speed up the process of study of the same one and to increase the possibilities of obtaining that financing, we must present that documentation in the most complete way possible.

At the time of receiving the payroll it is necessary to be attentive to several aspects, beginning with its organization. The structure of the payroll consists of: company’s identification data, employee’s data, settlement period, payments, deductions, contribution bases, liquid to be received and place of issue, signature and stamp of the company and the employee.

How are partner loans to the company accounted for?

Accounting for loans from the partner to the partnership.

When the partner makes a loan to the partnership, the partnership must recognize a liability in favor of the partner. The loan to the partner is a simple account payable, recorded in account 2355 known as payables to shareholders.

What are shareholder loans?

It is defined as the operation through which the ownership of Shares and Securities is transferred from its owner, known as lender, to the borrower, who in turn, at the expiration of the established term, is obliged to return to the former other Shares or Securities, as the case may be, of the same issuer and, at the end of the established term, to …

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What type of account is used to record loans that the partnership makes to a partner?

The account (551) Cash current account with partners and administrators and any other natural or legal person that is not a bank, banker or credit institution, nor a customer or supplier of the company, and that do not correspond to joint venture accounts, this account is generally used when a partner or …

Loans to shareholders are assets or liabilities

In addition, the loan contract must be registered and the Property Transfer Tax (ITP) must be paid through form 600, at the corresponding Autonomous Community tax office. As it is a loan between individuals, it is exempt from payment, but this procedure must not be forgotten, and must be carried out within one month from the date of execution of the contract.

Documenting and registering the loan contract we prove the origin of the money but it would not be enough to free us from paying tax on it because if we do not justify the return of the money, it would be considered a donation or liberality, which would imply applying the Inheritance and Gift Tax (ISD). In order to justify its return it would be enough to keep the bank statements where the returns made are verified.

In this way we can help (or be helped) avoiding problems with the Treasury and without having to go through the hoops of the financial entities, even more when in most of the cases it is the difficulty of credit the reason for these loans between individuals at zero rate.

How is a loan accounted for in accounting?

The main accounting account used to record long-term loans is Long-term debt (171). This account records loans received by the company from non-banks with a maturity of more than 1 year.

Which account is a documentary credit?

These are those in which the issuing bank does not have an account at the crediting or paying bank and is requested to pay on our behalf according to our instructions or when the issuing bank indicates another bank as the reimbursing/paying bank. It is the one that the issuing bank sends directly to the beneficiary.

What is a transferable loan?

What is it? In other words, in a transferable credit, the beneficiary can instruct the transferring bank to make the credit usable, partially or totally, by one or more beneficiaries (from his country or from another country.) …

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Loans to partners tax treatment

In order to have the necessary resources, businessmen resort to different financing methods, among them, the colloquially called loan. Due to the tax implications involved, it is necessary to properly document the transaction, so that it is not distorted.

According to article 2384 of the Civil Code of the Federal District (CCDF), a mutual is a contract by which the mutuante is obliged to transfer the ownership of a sum of money or other fungible things to the mutuatario, who is obliged to return another sum of the same kind and quality, while article 2393 of the same law allows the stipulation of interest, whether it consists of money or goods.

The CCDF does not determine a specific form for the execution of the contract, however, it is evident, for legal certainty, the need to execute a written contract, where it is clearly agreed, among other clauses:

Thus, the document that fully accredits the execution of the legal act is the written contract that the parties have, because in the event of not having it, there would be a problem of the burden of proof, which can clearly result in an unfavorable resolution in a trial of any nature brought before the courts.

When is a dividend considered a fictitious dividend?

What is a fictitious dividend? … “The following shall be considered as distributed dividends or profits for which the corresponding tax must be paid: II. Loans to partners or shareholders, with the exception of those that meet the following requirements.

What is an interest-bearing loan agreement?

Simple or with interest. It is simple mutual when the mutuary is not obliged to pay any consideration for what is received; it is mutual with interest when the mutuary is expressly obliged to pay a consideration that may consist of an amount of money or other goods.

What are accounts receivable from members and when does it occur?

Accounts receivable from partners and shareholders provide information on the resources delivered to the owners of the entity’s equity and the payments made to third parties on their behalf.

Interest-free loans from partners to the company

In a previous commentary on whether it was more favorable for tax purposes to work as a self-employed person or through a partnership, we came to the conclusion that once a certain level of income was reached, it was better to incorporate a partnership, provided that part of the profits were not distributed and were kept within the partnership, either to be invested in the company itself, in other business opportunities or as a cushion for less buoyant times and thus avoid having to make a future loan to the partnership.

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In view of the above, opting for the loan from the company to the partner has hardly any tax impact on the company (none on the partner) and avoids the practice of withholdings, only being necessary the agreement in the meeting and the formalization of the contract with all its clear terms, which should not even be registered although the presentation of the model 600 can be advisable to give validity to the date of the same one.

However, unlike the rest of the less fiscally advantageous alternatives, the partner must return the amount received (why not in convenient installments discounted from the remuneration usually received from the company or as successive dividends on account of the loan). Otherwise both the company and the partner will be penalized, the former for not including the amount in his income tax return and the company for the lack of withholdings made.

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