Family loan to start-up company

F

fixxation

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Hi,

I've just registered as a limited company with the CRO, and I have a quick question about loans from a family member going into the company and how to pay them back later on without getting taxed on it.

Basically my father is loaning me money each month for a while, and this will be my only source of income until the company starts making money. It will be a fixed amount in euro each month, and then when the company is making money, we'll pay him back.

Does anyone have any advice on how the best way to go about doing this is? I figured he could pay me directly into my personal current account, but then that doesn't show on the company books that it is going into the company as a loan. On the other hand, if it goes into the company account, I'll be taxed as income when I need to use it to live each month.

There must be a way to show that all this money is a loan, and when it's paid back - it's not taxed. Just not sure how at this stage.

Any advice here is greatly appreciated.

Many thanks.
 
He can loan the company the money and the company can just pay it back to him and no tax is involved.

It reads like you are getting a loan to pay yourself a salary, which is crazy, as you will have to pay taxes that go with a salary.

If its for company overheads, he loans it to the company and company pays him back.

If its for company to pay you a salary, he loans the money directly to you and
you pay him back, no company involved.
 
Keep in mind that there's a chance the company will not succeed. You should think very carefully about what will happen in those circumstances.

Personally, I'd be very slow to go down the "friends and family" route for funding a start-up.

If you do go ahead, I'd agree it makes no sense to use the funds to pay into the company and then draw a salary: you're paying tax for no reason in that case.
 
Thank you both for the advice- yeah it is for a salary for the first few months, but unfortunuately there aren't many other options available at the moment.

Definitely risky with the family route but it's been well thought through so I'm very confident that we'll be okay...

Thanks again.
 
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