QUESTION from Kyle:
My S-Corp is debt capitalized with a 50K loan. I’ve spent some on business expenses etc. My s corp now owes the loan money. Also, in my loan agreement, I pay the loan 25% of my NET profits from each rehab I sell. I big percentage, but it’s a family loan. Gotta help the fam!!
What would be your best method to set this up in Investor Books to keep track of the loan and money I spend against it and therefore owe it. And also to keep track and divvy up my net profits after selling each rehab? A video or written reply would be greatly appreciated.
Thank You Mike
Kyle
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keep it simple Kyle.
After entering the closing statement when you sold it.
You can run a report and see your dollar amount of real profit.
in your case, you say 25% is $7500 is the “fee” for the loan, or is it a partnership?
this makes a huge difference.
Mike
Thanks. Makes sense. Now how about when I distribute the 25% after each property sale.
Let’s say I make $30k on a rehab sale. I owe 25% to my Loan (liability account). So I need to move $7,500 over to my loan account.
To make it look clean for taxes and for Investor books to account for it correctly, do I just record the whole $30,000 into my entity account and then make a “deposit” from there into the loan account for the $7,500? Or is there a better way? Thanks.