Does a personal loan count as income on my taxes?

Forum|Forum|1 year ago
January 20, 2025
2 replies
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I gave my company a personal loan. Is this recorded as income?

KeshaH

Level 11

Yes and no.

The repayment of the principal amount of the loan isn't taxable income to you. However, any interest you receive on the loan is taxable.

Opus 17

Level 15

If you are a sole proprietor, I'm not even sure putting personal money into the business even counts as a loan at all.

If it is an S-corp, partnership, or LLC with more than one member, then loaning money to the business is not income for the business (it is a liability) and the repayment of interest is taxable but not the principal. Also, you must charge interest and the business must pay interest. Even if the business does not pay interest, you must report taxable interest income equal to the amount of interest you could have charged using the applicable federal minimum rate.