When you are ready to start your own business and place it under a series LLC, you do need to put money into it to make it a profitable one. When funding your series LLC, you will be better off putting the money into a bank account for your business. There is more than one way to fund a series LLC. Here is more information on how funding your series LLC works.
Open a Bank Account
When funding your series LLC, the first and most important thing to do is to open a bank account for it. Your very first deposit will be to pay for your equipment you need for your business. Such equipment includes office equipment and supplies, office furniture, and whatever else you will need for your business. There are two ways you can do this. Keep reading to learn how to fund your series LLC with your bank account.
Invest in Your Company
The first funding option for your business is to invest in it. However, if it is a series LLC business, you will not be the only person investing in the company. Although there will be more than one owner if more than one person invests in it, make sure to bring them into the company at the same time. You don’t want to bring in other investors and owners at different times. Also, don’t forget that investing in a business has to go under both federal and state laws. Another thing to remember is to not bring in other business owners without proper legal advice first.
Loan Yourself Money for Your Business
The other way to fund your series LLC is to loan yourself money for your business. You should do this for startup and operating expenses. You can always put the money back in after you start making a profit. Or, you can make payments back into the business to pay it back. Because the series LLC doesn’t think of this as income, you will not have to report this to the IRS for tax purposes. However, if this is the option you choose to fund your series LLC, you will have to keep records about it. The best way to record the loan and the payment back is to write out a Promissory Note as well as a resolution statement from the other members of the LLC saying that they approve of your loan.
Another thing about using the second option to fund it is that you will have to add interest to your own loan. The reason for this is because if you don’t, the IRS can do it themselves. This could mean that it will end up being taxable income for the lender, but without an offsetting expense on it.