Sole trader loan


2

I am thinking of becoming a sole trader. I know as a sole trader I am liable for any debt the company has. Can I place money from my personal account into the business account to start it off? I wish to buy a laptop for work. If I do this once I earn some money can I pay the money back to my personal account? Do I need to pay off the load in this tax year?

UK Tax Loan

asked Oct 29 '11 at 09:38
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Jack
11 points
Get up to $750,000 within 24 hours with a small business loan from Clarify Capital

3 Answers


1

Jack - sounds like you need to speak to an accountant. All these issues you mentioned could have tax implications for you in some form. Depending on what country you are in could have a big impact on what type of company / corporation / structure you need.

Maybe go along to a local business networking meeting - You'll probably find an accountant you can speak to who won't charge for some basic advice.

answered Oct 29 '11 at 14:21
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Sunil
1,072 points

0

Regardless of how you structure your business, if you are a signatory on the account, you can do anything you want with the money. You can put money into the account and take it out as you please. The only difference is the tax implications down the road.

The fact that you don't even know if you can deposit personal money into a business account strikes me as really odd. What else would you do? Grow your business from zero?

If you're looking to write something off at the end of the year as a business expense, just save the receipt.

answered Oct 29 '11 at 17:14
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Jason Colantuoni
437 points

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Short answer: yes you can seed your sole trader business with your own money: there are all sorts of costs that need to be paid for somehow before you receive income. Almost certainly you wouldn't need to pay it off within a year - but check your local taxation laws to be sure.

If you want to be conscientious you would write yourself a letter detailing the loan and when payment would become due. Sounds silly but if you ever get audited (or lose your memory!) you'll at least have some documentation explaining where the money came from and where it is going.

I agree with Sunil in that you should seek some professional financial advice. As a bonus there also might be some attractive alternatives in your part of the world that provide better asset protection (whether that be a private company or a trust or something else).

answered Nov 2 '11 at 19:19
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Paul Filmer
790 points

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UK Tax Loan