I own a small C Corp with a couple relatives. In June, one of them had a payment due for something personal and wrote herself a corporation business check for $6K. She's going to pay it back over the next three months.
How do we classify the expense and payback? Also, the check was deposited in June and our FY ended in July, so does that influence our options.
I don't think we should draw down owner's equity, because we're looking for business credit and I've heard banks like to see owner's have equity and the three of us own equal shares, so we would have to all draw out of owner's equity, right? And that should be a dividend, but it was only issued to her in that FY. And we can't really afford $18K in dividends.
Could classify it as a loan from the corp to the owner? With a set interest rate, etc?
If it comes up again and we can resolve it before the end of the FY are there other choices?
Thanks, G