I received a very long question, in multiple parts, from someone just starting their online business. I’m going to edit it down to a few salient points.
- If my family gives me a loan to start the business, is this income?
No. It’s a loan.
(2) When I pay my family back, is this income to them?
No. It’s a loan repayment. However, if there is interest as part of the payment, that would be an expense for you and income for your family member.
- Is it better to get the money via wire or check?
For tax purposes, it doesn’t matter. Do whatever is best for your business.
- Should I get one check for $50,000 or 6 or 7 checks of $7K – $8K each?
For tax purposes, it doesn’t matter. Do whatever is best for you and your investor.
- Would a deposit of $50,000 delay availability of funds?
Possibly. Ask your bank.
- Is it better to open a business checking account?
YES! Don’t even consider starting a business of any kind unless you also have a separate business bank account. You should also have a separate credit card that is dedicated JUST to your business. Don’t commingle your personal and business cash, income or expenses.
- How do I pay him back? Do I wire the money or write a check to him?
It doesn’t matter. Just make sure it’s coming from your business account, not your personal account. Keep your business income, cash and expenses separate from your personal income, cash and expenses.
The rest of the questions will be in the next blog post in the next few days.
You know what’s so telling about these questions? These are the things that a seasoned business owner would never think twice about, but for someone just starting out, they could be the issues that just stop a person cold.
Figure out what’s stopping you and get your business started THIS WEEK. Your wallet will thank you.