Loans

Loans

If you loan money to your LLC or borrow money from it, you should always document both the loan and the repayment. One of the biggest mistakes people make in running a small business is to treat it like another checking account. This can cause you to lose your liability protection.

Generally you should make loans in round rather large amounts like $1000 or $5000. Do not use your company check to pay your bills and then pay it back at the end of the month.

You should use a promissory note and sign and date it. When you pay it off, write "paid" on it and keep it with your records. The better records you have, the better it will be for you if someone claims your business did not act independently of your personal finances.