Loan

Discussion in 'Business Operations' started by coolmc11, Nov 24, 2007.

  1. coolmc11

    coolmc11 LawnSite Member
    Posts: 18

    Hi just wondering how to go about this..I am starting up a new business a family member is taking out a loan in their name and giving it to me..I am paying the loan and interest. When they give me the money how do they do that. Do they write the check out to the business name or to my name? Is there anything involved with taxes...??? Since im accepting it into my business account.??
     
  2. echeandia

    echeandia LawnSite Bronze Member
    Posts: 1,131

    My guess is that you are a kid and your dad is getting the loan. That is good because when you don't pay him back he won't mind that much.

    Now regarding the treatment of the money. It sounds as if it is a loan to the business based on your statement. He should make a check payable to the business which you should take and deposit in the businesses bank account. On your books you should record it as a liability (loan from dad). Then each month when you write him a check you record it as well. Record the principal portion of the payment from the loan liability and the interest in an interest expense account.

    Now, since you are just a kid you are prevented from entering into legal agreements. This means you won't be able to open a bank account without your fathers (or mother) signature. So technically, he will own the company. He will have to set everything up for you. This is the main reason most kids just mow lawns as a hobby.
     
  3. coolmc11

    coolmc11 LawnSite Member
    Posts: 18

    Thank you for that information. I am not a kid. I just dont have good credit to get a loan so thats why they are doing it for me. If you have any other recommendations for me that would be great. I have all the legal papers done for the business. Im just thinking if i should get an accountant now or in the spring when i start up. Thanks Again
     
  4. hoskm01

    hoskm01 LawnSite Fanatic
    Posts: 5,690

    The sooner you see an accountant, the better off youll be.
     
  5. britsteroni

    britsteroni LawnSite Senior Member
    Posts: 334

    I am not trying to be mean, but if you don't have good credit, why would someone go get a loan in his/her name for you?? They are the ones at risk, not you. This landscape industry is already oversaturated as it is. How do you think you are going to make it?

    I am not trying to be a jerk. But you should be able to answer some of these questions (and a lot more) for yourself and especially for the guy putting up his money, his credit, his name, etc. before you go asking people for other advice.

    My advice... Find another business that is less saturated and pursue it. Or work your butt off for someone else, save the initial start up funds and go about it that way if you are content on becoming the next Brickman. Do not borrow friends/families money to go into a business like this.

    Just my 2 cents.
     
  6. coolmc11

    coolmc11 LawnSite Member
    Posts: 18

    its not that i have bad credit. i dont have enough credit. Im 21 so i sont have enough yet. I am building my credit up. Thanks for the advice
     
  7. Tony Clifton

    Tony Clifton LawnSite Senior Member
    Posts: 865

    Hire an accountant now, they will help you with this. Do not look through the yellow pages when looking for one. Look around at succesful people and businesses, ask them who their accountant is, interview a few, then hire the smartest one that you think you can get along well with.
     

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