Hi, I'm want to transfer funds to my personal account from business but unclear what to do. Business Account: $20k Cash (current). This business has a $6k personal loan from personal account (2 years ago) Personal Account: $18k in debt (credit cards, line of credit etc) Goal: I want to clear my personal debts. Should I: 1. Transfer an asset (domain name and contents) from my personal to my business in exchange for $18k so that I can clear up my debts. 2. Have a $8k loan payback and then transfer the domain and asset for $10k. 3. I haven't paid myself from this business, so maybe a lump sum for work? 4. Any other recommendations? Add. Notes: I didn't make any agreements on the personal loan to the business when I transferred it 2 years ago. I can justify the price of the asset I'm planning on transferring to $20k+ in value. I just simply moved the funds. I'm in Ontario, Canada if that helps.
Hi- I am not familiar with the tax implications in Canada because I am located in America. However, if you were in the united states and you sold an asset there would be a tax implication there. Never the less, this would clear up any debt you have. Option 1 would be a good choice. As it relates to option 2, there could be a tax implication here and I would prefer this option over option 1. Having a loan assignment to your business would create an obligation to repay the loan based on the loan payment terms. If you are the sole owner of the company, you can choose to forgive the loan and simply pay the taxes that are due for the income received. I like this option better because the 8k loan from your business and the personal asset sale for 10k will leave you a net amount of 18k. you now have enough to pay off the 18k in debt. Your debt will be reduced from 18k to 8k and instead of owing it someone else you owe your business. You can choose to write that debt off and pay the income taxes.
Answered 3 years ago