I am looking at setting up a single member LLC. How would I pass money into it so that it can do things, like pay bills, u-haul money, etc? (This would be for when there is no income, yet.)
You could buy units periodically, as the LLC needed cash.
I'd make a few notes in your LLC records stating what you're doing, and that the LLC is going to sell some few shares now, some next year, etc.
Also I'd note in the share log that the LLC is issuing x number of units @ $x per unit...next issue, next year might be for higher price, etc....very flexible so it can match your needs.
I have heard of the business owner extending loans to the LLC/Entity. Since you and your LLC are separate entities you can lend money to it just as you would lend money to a good friend and it is perfectly legal. You can loan your LLC x amount of dollars with interest and start repayment when your business starts to make money or whenever you state on the promissory note, loan docs etc. I have never personally done this but I heard it is a strategy to fund, withdraw & protect assets. In most in cases, loan repayments are exempt from self employment taxes so this is a method some business owners use to withdraw funds from the company. I proposed a question to the forum members about one of the non-exempt ways (I think) (see my profile for that thread). Also in certain cases if you encumber the LLC with loans & if the LLC get sued or creditors come you will be one of the first ones to get your money.
Here is a website that has a lot of valuable info: Http://www.toolkit.cch.com/text/P12_7475.asp
Remember before you execute any strategies or methods from any forum, board or website consult with a CPA or Atty.
[ Edited by gmackk on Date 07/30/2004 ]
You'd just write a check to the LLC, and make a record that this is for your purchase of the units of the LLC.
Any amount you want to buy the shares for is OK as it's your business alone.
Then you deposit that check in a new LLC bank account and start paying bills with that account.
A big advantage of an LLC is the law isn't so strict on requiring minutes & resolutions for every move, as would be required ot C or S Corp.
Thank you for that information. It does lead to another question:
Is that acceptable only for the initial funding, or can it be used off an on until the business is generating an income of it's own?
You could buy units periodically, as the LLC needed cash.
I'd make a few notes in your LLC records stating what you're doing, and that the LLC is going to sell some few shares now, some next year, etc.
Also I'd note in the share log that the LLC is issuing x number of units @ $x per unit...next issue, next year might be for higher price, etc....very flexible so it can match your needs.
I have heard of the business owner extending loans to the LLC/Entity. Since you and your LLC are separate entities you can lend money to it just as you would lend money to a good friend and it is perfectly legal. You can loan your LLC x amount of dollars with interest and start repayment when your business starts to make money or whenever you state on the promissory note, loan docs etc. I have never personally done this but I heard it is a strategy to fund, withdraw & protect assets. In most in cases, loan repayments are exempt from self employment taxes so this is a method some business owners use to withdraw funds from the company. I proposed a question to the forum members about one of the non-exempt ways (I think) (see my profile for that thread). Also in certain cases if you encumber the LLC with loans & if the LLC get sued or creditors come you will be one of the first ones to get your money.
Here is a website that has a lot of valuable info: Http://www.toolkit.cch.com/text/P12_7475.asp
Remember before you execute any strategies or methods from any forum, board or website consult with a CPA or Atty.
[ Edited by gmackk on Date 07/30/2004 ]