I'm seeking an tax specialist or accountant to advise on a proper chart of accounts in Xero and general accounting for a new startup.

I am well-versed in taxes, business consulting and teaching best practices, and I have been in this field for many years.

To answer your question, you can log the funding to the C-Corp as a Loan from Owners (liability account). This would require a loan agreement, and the agreement must cover details of the loan to the company including a fair market interest value to be paid back to the owner. I have an excellent template for this type of agreement you would need to draft. With this documentation and treatment of the loan, when you distribute money from the company back to the owner, it would not be considered dividends. Therefore, it would not be taxable to pay the owner back his/her funding.

I'd love to discuss this in more detail over a call. This is a pretty complex subject with the setup and ongoing treatment so I'd be happy to go into more detail with you! Also, we can cover the chart of account and other best practices.

Answered a year ago

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