Hi All:

I launched a new business at the beginning of '06. It's a high-dollar sevice business and we had NO income in '06, but we did land a client that will be paying us in '07.

I received a number of loans from friends and family and will be paying them back in '08. The loans were used to pay living expenses and bills, as well as some business expenses.

I'm currently a sole proprietor but will be going LLC by April.

Now, all that said, should I claim those loans as income for '06, since I 'paid' myself?

Thanks-

the various sources of monies represented capital to get the entity off the ground. Loans to owners/officers are permitted and should be recorded as such, "Loan to Owners' supported by appropriate documents, terms, interest, etc.

You state you are a 'sole owner' but further into your query you indicate 'we.' Which is it? For Federal tax purposes a single owner llc is considered by the irs as a disregarded entity, or P/L flows thru to the owner, SE tax, etc. Hope you're aware. since you mentioned company is presently a sole owner and soon will be llc. i see no difference as sole owner or one owner llc.

Depending on state, a service llc will not protect owners against claims of negliglence, professional malpractice, if you're licensed professional.

Thanks TMZ I had a similar situation and I was wondering the same thing.