Investment money and Tax


Myself and a friend would like to start a new company.
I will be doing development work and my friend will invest money.

Our company isn't yet registered, but my friend would like to transfer a chunk of the money to me so I can buy some equipment (we live in different countries).

My question is - what is the tax status of the money he will transfer ? Do I need to declare this as income? Can I put it on the company's balance sheet when the company is registered ?


asked Jun 28 '11 at 17:25
8 points

1 Answer


Investment money is not taxable if it's transferred to the company and not you personally. Yes, you put this investment on the company's balance sheet once it's registered.

This is a common thing. As long as the money is used to start the business (e.g. for equipment, rent, etc) and not for your personal use, then it's not taxable.

Also, depending what country you live in, gifts of under a certain amount are not considered taxable income. For example, in the US, a gift under $10k/year is not taxable and does not need to be reported.

You should check your countries laws, but in general, investment is not taxed as personal income as long as it goes to building the business.

answered Jun 28 '11 at 21:56
Jarie Bolander
11,421 points

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