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I have an LLC, S Corp where I and my business partner share a 50/50 ownership. We ran out of cash, so I deposited $1,000 into the account to get us over the hump. The plan is to pull it back out once we have enough.

I'm unsure of how to categorize this. Quickbooks gives me the options of "Owner's Investment (Equity)" and "Owner Loans (Liabilities)".

Also, when I go to take it out, I don't want it to count as income or as an owner's draw, just as reimbursement basically.

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  • I’m voting to close this question because this is not related to personal finance, and is a legal question that should be discussed with your attorney and/or tax adviser.
    – littleadv
    Apr 22, 2022 at 1:44
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    If you want it back, it's a loan. That's the definition of what a loan is.
    – DJClayworth
    Apr 22, 2022 at 2:13
  • @DJClayworth Does the government see it that way? Every business investor wants their investment back. Are they all loans?
    – user253751
    Apr 22, 2022 at 11:06
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    No, most investors want a share of the profits, not their money back. They hope that the profits will be more than their investment. That's what investing is. A loan is where you give someone money and then they give you that same amount back plus some pre-agreed amount for interest.
    – DJClayworth
    Apr 22, 2022 at 12:53
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    "The plan is to pull it back out once we have enough." It's a loan. Don't overthink it.
    – Pete Becker
    Apr 24, 2022 at 15:11

1 Answer 1

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Since everybody in comments is agreed, let's make this an answer.

If what you expect back is the amount you put in, optionally plus some amount for interest, then it's a loan. That's pretty much the definition of a loan.

If what you expect back is a share of the profits the company makes, or some part of the company's value, then it's an investmentment.

From your description you are making a loan. The only thing you need to report to the IRS is any interest you charge as income. Make sure you write down the loan agreement and get the company owners to sign in case you are audited.

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