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    mjdillard's Avatar
    mjdillard Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Mar 28, 2007, 11:08 AM
    Shareholder loan to business
    During 2006 my husband and I (the ony 2 shareholders) deposited 20K into the business checking account of our small business (it is an S Corp). Now I'm trying to reoncile income and expenses and I don't know how to categorize the loan, nor the re=payment of the loan by the business. I use MS Money for the bookkeeping, but haven't been able to find the answer in either the software help or online help. I'm almost bald from pulling out my hair trying to figure this out. Is the loan Income or Expense? Is the repayment of it Income or Expense? Thank you in advance for your answer!
    Smith21000's Avatar
    Smith21000 Posts: 69, Reputation: 9
    Junior Member
    		  
    #2

    Mar 28, 2007, 01:12 PM
    The deposit of 20k by you and your husband should not be either income or expense, the first entry to your accounting records should be as followed

    DR Cash 20k
    CR Loan Payable 20k
    (originally entry of 20k)

    When the your company paid you back the entry should have been as followed:

    DR Loan Payable 20k
    CR Cash 20k
    (To paid off loan to owners)

    Both the deposit and repayment of the loan only effect your balance sheet and have no effect on your income statement. Hope this helps!
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
    Ultra Member
    		  
    #3

    Mar 28, 2007, 02:54 PM
    Smith has a pretty good answer.

    However…

    If your company is paying you INTEREST on top of the 20,000 loan, than that interest can be written off as an expense as long as the interest is at a reasonable rate.

    So you would also Dr. Interest Expense when paying back the loan and the cash would be split somewhat between interest and principle repayment.
    mjdillard's Avatar
    mjdillard Posts: 2, Reputation: 1
    New Member
    		  
    #4

    Mar 29, 2007, 08:23 AM
    Quote Originally Posted by mjdillard
    During 2006 my husband and I (the ony 2 shareholders) deposited 20K into the business checking account of our small business (it is an S Corp). Now I'm trying to reoncile income and expenses and I don't know how to categorize the loan, nor the re=payment of the loan by the business. I use MS Money for the bookkeeping, but haven't been able to find the answer in either the software help or online help. I'm almost bald from pulling out my hair trying to figure this out. Is the loan Income or Expense? Is the repayment of it Income or Expense? Thank you in advance for your answer!
    Thank you so much for the help!
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