1. Money
Jean   Murray

The Best Way to Put Money Into Your Startup Business

By April 14, 2009

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You are starting a business and you need to put some money in the business - call it "seed money" if you want. What is the best way to account for that money? Should it be a loan or an investment? My post last week about a Tax Court case involving a loan to a business (that turned out not to be a loan) got me to thinking about this subject.

Even if you don't have to get money from a bank, you will probably need to put money into your business at the beginning. So, here you are with check in hand and your bookkeeper says, "How do you want to book this? Is it a loan? Or an investment?" There are tax consequences and risks to each course.

Loaning Money to Your Business
As we saw in last week's Tax Court case, you can certainly loan money to your business, but make sure the loan is an arms-length transaction that clearly separates you from the business and that puts in writing the expectations from the company - the interest rate on the loan, how the loan will be repaid, and the consequences if it isn't repaid. The interest on the loan is taxable to you when it is repaid. The repayment on the principal is not taxable, since you have already paid the taxes on it.

Investing Money in Your Business
If you invest in your business, you are putting money in owners equity (retained earnings in a corporation). You can take out the money at any time without tax consequences, but if you take out gains or get a dividend, you pay capital gains taxes on these payments.

Risks of Each Option
Your loan to your business makes you a creditor, just like the bank or vendors. If the business can't pay its bills, having a loan document will put you in the group of creditors and give you a chance of getting some of your money back in bankruptcy proceedings. If you invest in your business and it goes bankrupt, you probably will not get your money back.

Your decision is yours to make. Whichever you decide, keep good records of the transaction and make sure it is clear how the money is to be accounted for in the books of the business. Mixing business and personal funds is a trigger for IRS scrutiny, and you can help yourself and your business by making it clear to anyone who looks how the funds are accounted for.

Disclaimer: This post, and the information on this Guide Site, is intended for general information only. The author is not a CPA, tax attorney, or Enrolled Agent. Consult with your tax professional for information relating to your specific situation.

Comments
July 30, 2009 at 11:25 pm
(1) Anfisaa says:

HOW TO TURN SIX DOLLARS INTO SIX THOUSAND DOLLARS: I found this on a bulletin board and decided to try it. A little while back I was browsing 
through newsgroups just like you are now and came across an article similar to this that 
said you could make thousands of dollars within weeks with only an initial investment of
$6.00! So I thought “Yeah right this must be a scam” but like most of us I was curious 
so I kept reading. Anyway it said that you send $1.00 to each of the 6 names and 
address stated in the article. You then place your own name and address in the bottom of
the list at #6 and post the article in at least 200 newsgroups. (There are thousands) No 
catch that was it. So after thinking it over and talking to a few people first I thought 
about trying it. I figured: “what have I got to lose except 6 stamps and $6.00 right?” 
Then I invested the measly $6.00. Well GUESS WHAT!?… within 7 days I started getting 
money in the mail! I was shocked! I figured it would end soon but the money just kept 
coming in. In my first week I made about $25.00. By the end of the second week I had
made a total of over $1000.00! In the third week I had over $10000.00 and it’s still 
growing. This is now my fourth week and I have made a total of just over $42000.00 and 
it’s still coming in rapidly. It’s certainly worth $6.00 and 6 stamps I have spent more
than that on the lottery!! Let me tell you how this works and most importantly WHY it 
works… Also make sure you print a copy of this article NOW so you can get the 
information off of it as you need it. I promise you that if you follow the directions exactly 
that you will start making more money than you thought possible by doing something so 
easy! 
Suggestion: Read this entire message carefully! (print it out or download it.) Follow the 
simple directions and watch the money come in! 
It’s easy. It’s legal. And your investment is only $6.00 (Plus postage) 
IMPORTANT: This is not a rip-off; it is not indecent; it is not illegal; and it is 99% no risk – 
it really works! 
If all of the following instructions are adhered to you will receive extraordinary dividends. 
PLEASE NOTE:
Please follow these directions EXACTLY and $50000 or more can be yours in 20 to 60 
days. This program remains successful because of the honesty and integrity of the 
participants. Please continue its success by carefully adhering to the instructions. 
You will now become part of the Mail Order business. In this business your product is not 
solid and tangible it’s a service. You are in the business of developing Mailing Lists. Many 
large corporations are happy to pay big bucks for quality lists. However the money made
from the mailing lists is secondary to the income which is made from people like you and 
me asking to be included in that list. 
Here are the 4 easy steps to success: 
STEP 1: Get 6 separate pieces of paper and write the following on each piece of paper 
”PLEASE PUT ME ON YOUR MAILING LIST.” Now get 6 US $1.00 bills and place ONE
inside 
EACH of the 6 pieces of paper so the bill will not be seen through the envelope (to prevent 
thievery). Next place one paper in each of the 6 envelopes and seal them. You should 
now have 6 sealed envelopes each with a piece of paper stating the above phrase your 
name and address and a $1.00 bill. What you are doing is creating a service. THIS IS 
ABSOLUTELY LEGAL! You are requesting a legitimate service and you are paying for
it! Like most of us I was a little skeptical and a little worried about the legal aspects of it 
all. So I checked it out with the U.S. Post Office (1-800-725-2161) and they confirmed 
that it is indeed legal. Mail the 6 envelopes to the following addresses: #1) J. Linley
4324 Beechgrove Dr.
 Grove City, OH 43123 #2) J McClintock
80 Lenard LN
 Northglenn, CO 80233 #3) R McRae
3125 Sebring Dr.
 Plano, TX 75023 #4) S. Lambert
P.O. Box 860
 Attalla, AL 35954 #5) Lorena Ruiz 230 W. Olive Ave Apt.B Monrovia CA 91016 #6) J. Melnikova ,Kazakhstan, Pavlodar, Kutuzov street 67, apt. 19, 140000. STEP 2: Now take the #1 name off the list that you see above move the other names up 
(6 becomes 5 5 becomes 4 etc…) and add YOUR Name as number 6 on the list. 
STEP 3: Change anything you need to but try to keep this article as close to original as 
possible. Now post your amended article to at least 200 newsgroups. (I think there are 
close to 24000 groups) All you need is 200 but remember the more you post the more 
money you make! You won’t get very much unless you post like crazy. 
This is perfectly legal! If you have any doubts refer to Title 18 Sec. 1302 & 1341 of the 
Postal lottery laws. Keep a copy of these steps for yourself and whenever you need 
money you can use it again and again. 
PLEASE REMEMBER that this program remains successful because of the honesty and 
integrity of the participants and by their carefully adhering to the directions. Look at it this 
way. If you are of integrity the program will continue and the money that so many others 
have received will come your way. 
NOTE: You may want to retain every name and address sent to you either on a computer 
or hard copy and keep the notes people send you. This VERIFIES that you are truly 
providing a service. (Also it might be a good idea to wrap the $1 bill in dark paper to 
reduce the risk of mail theft.) 
So as each post is downloaded and the directions carefully followed six members will be 
reimbursed for their participation as a List Developer with one dollar each. Your name will 
move up the list geometrically so that when your name reaches the #1 position you will
be receiving thousands of dollars in CASH!!! What an opportunity for only $6.00 ($1.00 for 
each of the first six people listed above) Send it now add your own name to the list and 
you’re in business! 
—DIRECTIONS —– FOR HOW TO POST TO NEWSGROUPS———— 
Step 1) You do not need to re-type this entire letter to do your own posting. Simply put 
your cursor at the beginning of this letter and drag your cursor to the bottom of this 
document and select ‘copy’ from the edit menu. This will copy the entire letter into the
computer’s memory.
Step 2) Open a blank ‘notepad’ file and place your cursor at the top of the blank page. 
From the ‘edit’ menu select ‘paste’. This will paste a copy of the letter into notepad so 
that you can add your name to the list.
Step 3) Save your new notepad file as a .txt file. If you want to do your postings in 
different settings you’ll always have this file to go back to.
Step 4) Use Netscape or Internet explorer and try searching for various newsgroups 
(on-line forums message boards chat sites discussions.)
Step 5) Visit these message boards and post this article as a new message by highlighting 
the text of this letter and selecting paste from the edit menu. Fill in the Subject this will 
be the header that everyone sees as they scroll through the list of postings in a
particular group click the post message button. You’re done with your first one! 
Congratulations…THAT’S IT! All you have to do is jump to different newsgroups and post 
away after you get the hang of it it will take about 30 seconds for each newsgroup! 
**REMEMBER THE MORE NEWSGROUPS YOU POST IN THE MORE MONEY YOU
WILL MAKE! 
BUT :
YOU HAVE TO POST A MINIMUM OF 200** That’s it! You will begin receiving money from 
around the world within days! You may eventually want to rent a P.O.Box due to the large 
amount of mail you will receive. If you wish to stay anonymous you can invent a name to 
use as long as the postman will deliver it. **JUST MAKE SURE ALL THE ADDRESSES ARE
CORRECT.** 
Now each of the 5 persons who just sent me $1.00 make the MINIMUM 200 postings 
each with my name at #5 and only 5 persons respond to each of the original 5 that is 
another $25.00 for me now those 25 each make 200 MINIMUM posts with my name at #4 
and only 5 replies each I will bring in an additional $125.00! Now those 125 persons turn
around and post the MINIMUM 200 with my name at #3 and only receive 5 replies each I 
will make an additional $625.00! OK now here is the fun part each of those 625 persons 
post a MINIMUM 200 letters with my name at #2 and they each only receive 5 replies 
that just made me $3125.00!!! Those 3125 persons will all deliver this message to 200
newsgroups with my name at #1 and if still 5 persons per 200 newsgroups react I will 
receive $1562500! With an original investment of only $6.00! AMAZING! When your name 
is no longer on the list you just take the latest posting in the newsgroups and send out 
another $6.00 to names on the list putting your name at number 6 again. And start 
posting again. The thing to remember is: do you realize that thousands of people all over 
the world are joining the internet and reading these articles everyday? JUST LIKE YOU are 
now!! So can you afford $6.00 and see if it really works?? I think so… People have said 
”what if the plan is played out and no one sends you the money? So what! What are the 
chances of that happening when there are tons of new honest users and new honest
people who are joining the internet and newsgroups everyday and are willing to give it a 
try? Estimates are at 20000 to 50000 new users every day with thousands of those 
joining the actual internet. Remember play FAIRLY and HONESTLY and this will really work! Youll Be Glad You Made The Effort !
thanks

April 14, 2014 at 3:53 pm
(2) Web Marketing says:

Hello there! I know this is kinda off topic
but I’d figured I’d ask. Would you be interested
in exchanging links or maybe guest writing a blog post or vice-versa?
My website discusses a lot of the same topics as yours
and I believe we could greatly benefit from each other.
If you happen to be interested feel free to send
me an email. I look forward to hearing from you!
Awesome blog by the way!

Feel free to visit my web site: <a href=”https://www.youtube.com/watch?v=wt326y8aWto”>Web Marketing</a>

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