Paying the down payment with an incorporated company

[nepoez]

That`s why I said it seems too good to be true. Also I don`t think accounting 101 is my real problem, it is much much more knowledge and experience that I`m lacking! That is why I`m on this forum asking the experts!

So it seems if I were to do what I said, and have the company write a cheque to the lender, then the asset(property) will have to belong to the company. If I want the asset under my name, it will have to be myself who write a cheque, hence the company has to pay me first either via div/income/loan.

Thanks!

And If I am wrong again, please do correct me!



QUOTE (thomasbeyer2000 @ May 4 2009, 06:22 PM) same thing .. the cheque is to the bank ON BEHALF OF YOURSELF the beneficial owner of the asset .. i.e. a loan or a dividend or income to YOU PERSONALLY !!!!

If you write a cheque to someone OUTSIDE the firm it is either:
a) a loan, or
b) a purchase of an asset, or
c) a dividend, or
d) income, or
e) a payment for an invoice i.e. an expense payment, or
f) taxes

please get a basic accounting 101 !!

Equity in firm = assets - liabilities

In accounting, if cash (which is an asset) is debited, something else on the asset side has to be decreased or on the liability side increased !

so cash goes down. What goes up: another asset or equity goes down or a (tax) liability goes down or payable goes down.

 

[Thomas Beyer]

QUOTE (nepoez @ May 4 2009, 07:46 PM) ...

So it seems if I were to do what I said, and have the company write a cheque to the lender, then the asset(property) will have to belong to the company. If I want the asset under my name, it will have to be myself who write a cheque, hence the company has to pay me first either via div/income/loan...
you CAN write a cheque to the bank or your lawyer from the company !!

The cheque is usually written to your lawyer IN TRUST (not the bank) !

The question is: how to account for it at year end 2009 !

Option 1: company buys assets. Then the accounting is simple.
Option 2: you own the asset .. then the cheque has to be accounted for as a shareholder loan, a dividend or income to YOU !

 

[Nir]

Hi nepoez, separate yourself from the company. remember although you own it you are 2 different entities. Therefore, there is no legitimate way to take out money from the company without paying tax on it. You are NOT paying yourself (although it is tempting to think this way) but rather another entity is paying you.

Hence, Thomas is right again.

 

[nepoez]

Hi folks,

Thanks for all the clarification! I`m new to real estate and business so all your feed back have been very helpful and educational.

Nepoez

 

[ToddStokowski]

Here`s an idea.
Consider a JV with your corporation.
Todd Stokowski, CA

 

[navaz]

Sorry to put a damper to the shareholders loan bit- there are rules and time frames that the shareholders loan has to be repaid by. You cannot borrow money from your corporation indefinately. In the second year it becomes a deemed dividend. There are better structures to use if you are a qualified Small business corporation. A family trust, a holdco that can acquire properties for you.

 

[JoseTejera]

This is a very valuable posting.

Thank you Thomas / Peter !!!

Keep em coming.


NEPOEZ, turn your messenger ON so I can send you a personal message.

 

[nepoez]

I`d like to, but unfortunately the admin has disabled my ability to send and receive messages!

QUOTE (JoseTejera @ May 5 2009, 10:00 PM) This is a very valuable posting.

Thank you Thomas / Peter !!!

Keep em coming.


NEPOEZ, turn your messenger ON so I can send you a personal message.