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<blockquote data-quote="Warren Allison" data-source="post: 1786457" data-attributes="member: 40587"><p>You don' have to get a corporate loan from a bank, credit union, etc, either. <em>YOU</em> can loan it to a company as well. Scott and I have an S-corp that owns the Kud-zu Corr land. S & W Ent., INC. When we bought the last herd of Corrs for $25k, S& W bought them. Had we just deposited $12.5 k each into the S& W account that is income to S &W and we will get taxed (pass through, so capital gains, not income). Instead, each of us loaned S & W $12.5k, at 5%, I think. There is a minimum interest way you have to pay yourself when you loan your company your personal money, but I forget what it is. Probably 5%. The interest it pays us is tax deductible to the corporation, so that off sets what little income from the interest we'd each personally make. That isn't really using OPM, but if neither or both of us didn't want to loan our money, we could have gotten it from a bank , at probably less interest, and it would be using OPM. </p><p></p><p>Most people with a significant amount of money, do not keep it in a savings account drawing a fraction of a percent interest. They will have CDs, mutual funds, deferred comp, 401ks, IRA's that their money is in. Things you can't go to a bank or whatever, and say I want to withdraw $100k and walk out with the money. It will take a while, and there may be withdrawal penalties, or maybe that money is earning more than the interest would be, so you'd want to leave it alone and just let your company get a loan. I think most people understand, that if you own stock in say, Delta Airlines, and it goes bankrupt, with millions of dollars in debt, neither you, nor the other 100's of thousands of Delta Stock holders have to pay it back. Neither do the stock holders of your company....even if you are the sole stock holder..., have to repay company debt. </p><p></p><p>But, that is enough of this debate. Anyone who doesn't understand, or isn't capable of having a corp that can get a loan without you personally co-signing. or just doesn't want to borrow money at all, in any way, shouldn't do it. It won't bother me, or any others on here that do it, or the millions of business owners all over who do it, in the least. But don't try to tell us it can't or won't work, or that it is a bad idea.</p></blockquote><p></p>
[QUOTE="Warren Allison, post: 1786457, member: 40587"] You don' have to get a corporate loan from a bank, credit union, etc, either. [I]YOU[/I] can loan it to a company as well. Scott and I have an S-corp that owns the Kud-zu Corr land. S & W Ent., INC. When we bought the last herd of Corrs for $25k, S& W bought them. Had we just deposited $12.5 k each into the S& W account that is income to S &W and we will get taxed (pass through, so capital gains, not income). Instead, each of us loaned S & W $12.5k, at 5%, I think. There is a minimum interest way you have to pay yourself when you loan your company your personal money, but I forget what it is. Probably 5%. The interest it pays us is tax deductible to the corporation, so that off sets what little income from the interest we'd each personally make. That isn't really using OPM, but if neither or both of us didn't want to loan our money, we could have gotten it from a bank , at probably less interest, and it would be using OPM. Most people with a significant amount of money, do not keep it in a savings account drawing a fraction of a percent interest. They will have CDs, mutual funds, deferred comp, 401ks, IRA's that their money is in. Things you can't go to a bank or whatever, and say I want to withdraw $100k and walk out with the money. It will take a while, and there may be withdrawal penalties, or maybe that money is earning more than the interest would be, so you'd want to leave it alone and just let your company get a loan. I think most people understand, that if you own stock in say, Delta Airlines, and it goes bankrupt, with millions of dollars in debt, neither you, nor the other 100's of thousands of Delta Stock holders have to pay it back. Neither do the stock holders of your company....even if you are the sole stock holder..., have to repay company debt. But, that is enough of this debate. Anyone who doesn't understand, or isn't capable of having a corp that can get a loan without you personally co-signing. or just doesn't want to borrow money at all, in any way, shouldn't do it. It won't bother me, or any others on here that do it, or the millions of business owners all over who do it, in the least. But don't try to tell us it can't or won't work, or that it is a bad idea. [/QUOTE]
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