If I were to put 10k in a new LLC as stat up capital, how do I get the 10k back? and to build credit for the LLC is it wise to borrow against it as collatoral? (I assume i can but just need confirmation.)
Thanks for any responce
Phil
mcwagner on here is good to discuss these topics.
you need two things:
1 your contribution - equity
loans - debt.
seperate checks. put them in biz account. initiate a promissory note for the amount you are lending the LLC. when your business makes profit - you will recieve your equity distribution based on your contribution share (percentage) - if it’s a sole member LLC - you’re 100%. then you would use the excess monies to pay back the loan you provided. what ever is left is taxed. the money you receive as your member distribution and any excess money (profit) is TAXABLE.
anything else is an expense that is deducted from your total revenues. you file quarterly and your cpa will handle these matters but you must be in control of the overall picture - letting your CPA know what money is what and how you plan to spend it etc.
Thanks alot TMCG.
do $100 to “fund” the entity. make the rest a loan: promissory note, interest, regular payments, the works. if bad things happen and you should find yourself with a charging order creditor, the company can repay a loan, but you may not be able to make an income distribution.
Thanks for the advise
so that basically means - you could have an entire year where you have no “income” distributions because all your revenues are used for expenses - i.e. your loans
oops, now a “charging order creditor” - mc - in dummie terms is?
let’s say you are personally sued and lose. judgement creditor can’t get his hands on the LLC (as opposed to corporate stock) but can get a charging order against distributions of LLC income. Next time the LLC wants to make a distribution of profits, bang, it goes to him. Now, you still control what the LLC does and you can frustrate him by never making a distribution of profits. Even better, IRS says that he has to pay the taxes on the LLC income, even if he never gets a distribution. The LLC is still operating, collecting rents, paying bills and creditors. But how do you get CASH out of the LLC without writing him a check?
Make loan payments to creditors: you.
Once those are used up, pay yourself a salary, benefits, whatever, as long as it’s not a distribution of profits.
thank you.
Mark have you ever herd of Darius M. Barazandeh, Attorney at Law / M.B.A.?