Structuring Capital Contributions
01.Funding the Company
The initial money founders put into the business to get started is called a capital contribution. This should be documented in writing and exchanged for equity.
02.Debt vs. Equity Funding
You can fund your business by taking personal loans (debt) or issuing stock (equity). Loans must include interest rates and payment terms to prevent IRS tax audits.
03.Capital Accounts
Keep track of each owner's capital account balance, representing their net investment in the business over time.