Rocinante said:
Let's say the owner of a corporation (a restaurant) funds the
company bank account with personal assets.
Assuming that the corporation has already been capitalized - meaning that
the shareholders have already paid for their stock - then I'd be inclined to
treat this transaction as a loan, and the withdrawal (below) as a reduction
in the loan.
Unless there is a legal reason to have more capital on the books I see no
purpose in booking it as a capital transaction.
The restaurant has not opened yet, but he feels the need
to withdraw funds for personal expenses. He has worked
many hours to get the place ready for opening. Can the
withdrawn funds be considered startup expenses
(salary) or is it an equity draw?
If there is a need to generate taxable salary to the owner from money he
loaned the business, knock yourself out. I see that as counter productive
on all fronts. It sounds like reverse Enron accounting. Loan money, take
salary, pay taxes. Loan money, take salary, pay taxes.