Lending money to your own limited company may seem like a convenient way to raise capital when your business needs it, but there are a few things that are important to know to ensure that it is handled correctly, both financially and for tax purposes.
A shareholder loan is when you, as the owner, lend money to your company without it going through the share capital. It can be a quick way to cover temporary liquidity needs or make an investment in the business. But the rules are different from ordinary loans and it's important to get the terms right.
Interest rates and conditions
The company should pay interest on the loan, even if you are the owner lending the money. The interest rate should be at a level that corresponds to the market to avoid problems with the tax authorities. If interest is not charged, the loan may instead be considered a dividend, which may result in higher taxes. Always make sure to write a clear loan agreement. It makes everything more transparent and facilitates both financial statements and audits.
Tax aspects
A properly managed shareholder loan affects both the company's and your own taxes. For the company, the interest is a deductible expense, which reduces the taxable profit. For you as an individual, the interest is considered income from capital. If the loan is not managed in accordance with the rules, the Tax Agency may instead consider it a dividend. This can lead to higher taxes than you planned.
When is a home loan an option?
Owner loans can be a good way to get money for the company for short periods. For example, it can help if the company has higher costs at certain times of the year or needs to finance a small investment. However, it is not always suitable for the long term. Long-term loans can make the company's finances harder to keep track of and can create tax problems.
How Monitor Capital Markets can help
Monitor Capital Markets is a stockbroker with a focus on unlisted companies. We help companies find the right buyer or seller for their shares through our secure and transparent platform. If you are thinking of sell shares in your company or want to find new investors, we can help you structure the deal in a way that complies with regulations while providing flexibility for the company.
By planning and documenting shareholder loans carefully, you can avoid pitfalls and ensure that both the company's and your personal finances are properly managed.
A selection of companies where we’ve facilitated transactions →
We broker deals in both innovative startups and established corporations. So far, we've completed transactions in more than 130 companies – and we actively track and have insight into over 1,000 companies. Our broad investor network means new opportunities are always on our radar.