I heard that some accountants often face an issue with "Shareholder/owner's advance" in small private company.
Basically, Shareholder advance are loans made to the owner for personal use and need to repaid to the company by the end of the year. In other word, owner has to pay it back to the company at the end of the year so the company income can be properly submited it for tax purpose. (So the Shareholder's Advance account have to be equal to zero at the end of the year, no matter what.)
For example, let's say the small private company has only one single owner and he wasn't able to paid the amount back to the company at the end of the year (Shareholder's advance = $400,000) As an accountant of the company, what should I do? Let's say the amount is quite large that it may not be reasonable to put it into meal/entertainment expense account. From the owner's point of view, he may think it's accountant's job to fix this problem, if the accountant refuse to "fix" it, then the accountant may have an bad impression to his boss.
What should we do in this situation? Is it ethical to "hide" that amount somewhere? If yes, how? or should we quit that job?
Basically, Shareholder advance are loans made to the owner for personal use and need to repaid to the company by the end of the year. In other word, owner has to pay it back to the company at the end of the year so the company income can be properly submited it for tax purpose. (So the Shareholder's Advance account have to be equal to zero at the end of the year, no matter what.)
For example, let's say the small private company has only one single owner and he wasn't able to paid the amount back to the company at the end of the year (Shareholder's advance = $400,000) As an accountant of the company, what should I do? Let's say the amount is quite large that it may not be reasonable to put it into meal/entertainment expense account. From the owner's point of view, he may think it's accountant's job to fix this problem, if the accountant refuse to "fix" it, then the accountant may have an bad impression to his boss.
What should we do in this situation? Is it ethical to "hide" that amount somewhere? If yes, how? or should we quit that job?