Startups Stack Exchange Archive

Personal money into business: Loan or Shares?

• posted by: mtyson on 2017-03-03
• tagged: united-states, accounting
• score: 2

Is it better to account for personal money put into a c-corp as a loan or shares purchased?

Answer 13705

• posted by: Pablo Rivera - Yelluw on 2017-11-29
• score: 0

Loans have to pay out interest but have a set duration. Say, you will pay $500 for 60 months at 10%. You know how much it will cost and can adjust to that.

Shares are forever and give their holders rights. This brings a whole set of additional issues. Are you willing to deal with any potential issues related to shareholders? Are you planning on paying a dividend soon?

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