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- Oct 23, 2019
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Hello,
I have the following situation -
1. I have a client who operates a general contractor business (an LLC)
2. He took out a home equity loan to put new siding on his house.
3. His company is going to perform the work.
3. There is extra cash leftover from the loan he wants to put into the company
4. The company would pay the note
My thoughts are the following -
1. The work to be performed on the house would be a normal sale where you have income and expenses
2. The extra cash he puts in would be OE
3. The payments the company makes would be a Draw
Questions -
Can the interest from the note be an expense on the companies books?
Also he has a "partner". The partner has not been added as a member to the LLC, yet. He was wondering, other than the income/expense from the work to be performed on his - would the partner benefit from this? I explained he would be out of the equation for the payback.
I want to know if I my thinking is on the right track. Do you see any other way or may have suggestions for accounting for the transaction.
I have the following situation -
1. I have a client who operates a general contractor business (an LLC)
2. He took out a home equity loan to put new siding on his house.
3. His company is going to perform the work.
3. There is extra cash leftover from the loan he wants to put into the company
4. The company would pay the note
My thoughts are the following -
1. The work to be performed on the house would be a normal sale where you have income and expenses
2. The extra cash he puts in would be OE
3. The payments the company makes would be a Draw
Questions -
Can the interest from the note be an expense on the companies books?
Also he has a "partner". The partner has not been added as a member to the LLC, yet. He was wondering, other than the income/expense from the work to be performed on his - would the partner benefit from this? I explained he would be out of the equation for the payback.
I want to know if I my thinking is on the right track. Do you see any other way or may have suggestions for accounting for the transaction.