Is it ok to enter into compensation agreement with my own single-member LLC, where the LLC issues promissory notes to me for the salary owed?
Yes, it is permitted. Make sure to document the transaction in both the minutes and by preparing promissory note(s).
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
Generally speaking, yes. You just have to make sure you document the loan with a promissory note and a resolution by the LLC authorizing the loan.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.
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Yes, you can loan money to your LLC, and your LLC can loan money to you, with the appropriate documentation.
But your LLC doesn't loan any salaries. Loans are loans, and salaries are salaries. You need to see a business lawyer and get a good CPA to make sure you're operating this LLC properly, or else it won't provide the limited liability it's meant to provide.
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Estate Planning Attorney
Yes, you can legally do that. However, to be complete, you'll want to do it exactly the same way as you would in loaning $$$ to anyone else. I'd get a promissory note and an interest rate that is reasonable. Be sure to DOCUMENT the transaction so that it stands up to an IRS Audit. Good Luck on your business!