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Biz Exp's-'can't Pay Owner $ Ea Mo 4 Servcs. Cld We Make Up A Loan Agrmnt & Incl The Amt In Ea Mo's Exp 4 Irs Biz Retrn?

Biz Exp's-'can't Pay Owner $ Ea Mo 4 Servcs. Cld We Make Up A Loan Agrmnt & Incl The Amt In Ea Mo's Exp 4 Irs Biz Retrn?

Postby Reed » Tue Oct 28, 2014 7:05 pm

The owner does a great deal of work each month and cannot be paid right now due to receivables not being high enough. He does get a little $ returned on money he has already invested. How do we show the money he is owed? Let's say we should pay him approx. $40 per hour and he works 20 hours per week. That's approx, 3,440 per month that we can't pay him right now. Can we add the 3,440 into our expenses even if the $ does not go to him? This wld be a loss 4 that month's P&L. We'd then have some type of promissory note saying that we owe him that $ times the months he invests his time into the business. Can the same type of thing be done for consultants that agree to work for the promise that they will be paid in the future(when the business is doing better). Wldn't this be a 'long term liability' with $ owed? Thanks 4 your help!
Reed
 
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Biz Exp's-'can't Pay Owner $ Ea Mo 4 Servcs. Cld We Make Up A Loan Agrmnt & Incl The Amt In Ea Mo's Exp 4 Irs Biz Retrn?

Postby Winthrop » Wed Oct 29, 2014 7:20 am

TheLightWorks said: 1 I'm not an accountant, but it seems to me that if paying these people would put the business into a net loss, it might be better on the books to give the promissory notes, but not actually make a "payment" until there is profit to pay it out of. the IRS does not give you extra for a net loss, so your best tax strategy is to just break even.(plus, if you lose money too many years in a row, they start asking why you're still doing it) 61 months ago
Winthrop
 
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Biz Exp's-'can't Pay Owner $ Ea Mo 4 Servcs. Cld We Make Up A Loan Agrmnt & Incl The Amt In Ea Mo's Exp 4 Irs Biz Retrn?

Postby Evelyn » Wed Oct 29, 2014 10:14 am

I'm not an accountant, but it seems to me that if paying these people would put the business into a net loss, it might be better on the books to give the promissory notes, but not actually make a "payment" until there is profit to pay it out of. the IRS does not give you extra for a net loss, so your best tax strategy is to just break even.(plus, if you lose money too many years in a row, they start asking why you're still doing it)
Evelyn
 
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Joined: Sun Jan 12, 2014 11:43 pm


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