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For a long time, I've been a one person startup, and have just bundled all business costs - presenting at conferences/travel, office rent, hardware equipment purchases, etc., to my personal account. Currently, I'm in some considerable open credit card debt due to that. How complicated would it be if I were to transfer the debt to a business?

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  • Who is going to borrow your newly created business that money? If the answer is 'you', you just moved it in a circle. And your credit card company is not going to accept that you transfer personal debt into a company that has no backing in any way; they want the money from you.
    – Aganju
    Jul 23, 2018 at 3:03
  • What country you are in? How do you plan to transfer the debt? i.e. is there capital in the business account that you will use to pay off the credit card debt?
    – Dheer
    Jul 23, 2018 at 4:45

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You can't transfer the debt from you to your (presumably newly created) business because you would need the consent of the company who owns the debt, and you aren't going to get that kind of consent.

If your purpose is reducing tax burden, then there is no difference between owing the debt directly and having a single-member LLC owe the debt. The best thing would be to get some income from this business so you can reduce your tax burden with the debt as an expense.

If your purpose is to file for bankruptcy to eliminate the debt, then you can't do that. Otherwise, all debtors would do it!

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    But couldn't the LLC deduct the interest?
    – TTT
    Jul 23, 2018 at 14:20
  • @TTT, yes, but I think a sole proprietor could as well, no?
    – minou
    Jul 23, 2018 at 18:12
  • Sure. But it sounds like you're saying there's no benefit to having a business own the debt, but I think there is due to the interest deduction. The tricky part is transferring it cleanly.
    – TTT
    Jul 23, 2018 at 18:40
  • @TTT, I believe he can deduct interest in either case so that this would not be an advantage in creating a company. Let me know if I'm wrong.
    – minou
    Jul 24, 2018 at 13:24
  • i think the business would have to exist first in order to deduct it. The structure doesn't matter; the new business could be a sole proprietorship, llc, Corp, but until it exists, I don't see how that interest could be deducted. The nice thing about creating the SP is there isn't much paperwork, but the accounting still needs to be fixed.
    – TTT
    Jul 24, 2018 at 13:31

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