Can I loan money to my own LLC?

Asked almost 2 years ago - Los Angeles, CA

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?

Attorney answers (5)

  1. Pamela Koslyn

    Contributor Level 20

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    Lawyers agree

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    Answered . 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.

    Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to... more
  2. Frank Wei-Hong Chen

    Contributor Level 20

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    Answered . 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... more
  3. Michael Charles Doland

    Contributor Level 20

    8

    Lawyers agree

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    Answered . 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... more
  4. Michael Leo Potter

    Pro

    Contributor Level 20

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    Answered . 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!

  5. Thomas Henry Schelly

    Contributor Level 2

    4

    Lawyers agree

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    Answered . Yes. But beware; too many such transactions and should the LLC get sued, you might leave yourself open to claims for piercing through the "veil" by treating the LLC as your alterego.

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